MTP Daily, Transcript 7/26/2017

Guests: Ed Royce, Amy Walter, Ken Vogel

Show: MTP DAILY Date: July 26, 2017 Guest: Ed Royce, Amy Walter, Ken Vogel

CHUCK TODD, MSNBC HOST: How are you? I missed you when you were gone. I hope you missed me when I was gone.

NICOLE WALLACE MSNBC HOST: Of course I did.

TODD: All right. See, I had to just force that out of you even if you didn't. Thank you, Nicole. Well done.

If it's Wednesday, the art of the repeal fails again.

(voice-over): Tonight, the health care debate. The repeal only vote fails. Can Republican leaders come up with anything that can pass the Republican Senate?

Plus, defending Sessions.

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: And I hope Sessions doesn't quit, and if the president wants to fire him, fire him.

(END VIDEO CLIP)

TODD: Republican senators forced to take sides in the Trump Sessions feud.

And why did President Trump move to ban transgender people from the armed forces today?

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Mr. President, how did you decide your policy on transgender people in the military?

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: She's very rude.

(END VIDEO CLIP)

TODD: This is MTP DAILY and it starts right now.

(on camera): Good evening, I'm Chuck Todd in Washington and welcome to MTP DAILY. Thank you for watching while I was gone and thank you for being here when I'm back.

We're following two major stories tonight. One of them could up end the Justice Department. The other could up end the entire health care system. That's all.

And what happens next on either of them right now? Anyone's guess. President Trump has torched the political landscape as we know it right now. He's publicly flogging his attorney general, Jeff Sessions, likely as a way to force his resignation, possibly as a way to fire Special Counsel Bob Mueller.

Today, Mr. Trump blasted Sessions again. This time he hit him for not firing the acting FBI chief, Andrew McCabe, because of his wife's old financial ties to Democrats.

So, if you're scoring at home, the president is now on the record saying he thinks Sessions, quote, "shouldn't have recused himself," is damaging the presidency, should be investigating Hillary Clinton's, quote, "crimes," should be probing collusion between Democrats in Ukraine, isn't tough enough on leaks and should fire the acting FBI director.

Amid this onslaught, Sessions is keeping his own head down but his former Senate colleagues are not.

(BEGIN VIDEO CLIP)

GRAHAM: I would fire somebody that I did not believe could serve me well rather than trying to humiliate them in public which is a sign of weakness. I hope Sessions doesn't quit. And if the president wants to fire him, fire him. You have --

MANU RAJU, SENIOR CONGRESSIONAL REPORTER, CNN: Do you think the president is demonstrating weakness by his handling of Sessions?

GRAHAM: Absolutely.

SEN. JOHN CORNYN (R), TEXAS, MAJORITY WHIP: Jeff Sessions is an honorable man. He did what any ethical attorney general would do under the circumstances under the rules of the Justice Department.

SEN. MITCH MCCONNELL (R), KENTUCKY, MAJORITY LEADER: I think the attorney general is doing a fine job, and I think he made the right decision to recuse himself from the Russia matter.

(END VIDEO CLIP)

TODD: Boy, there was a tone in McConnell's voice there, if you heard it, a stern tone. Even though you know McConnell's, sort of, monotone sometimes, you could detect that edge.

The White House attempted to explain why Sessions is still the attorney general. Given the president's dim view of him. Take a listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: If he is so frustrated and so disappointed in him, why doesn't he just ask him to resign or fire him? Why does he continue to just tweet about him instead?

SARAH HUCKABEE SANDERS, U.S. WHITE HOUSE PRESS SECRETARY: Look, you can be disappointed in someone but still want them to continue in their job. And that's where they are.

UNIDENTIFIED FEMALE: Does he still want him to continue on that job?

HUCKABEE SANDERS: I think that I made clear last week if there comes a point he doesn't, he'll make that decision.

(END VIDEO CLIP)

TODD: As his attorney general twists in the wind, the president's legislative agenda hangs in the balance. You're looking live at the Senate floor which is voting on, actually more like voting down, various pieces of health care legislation.

If you're scoring at home, after yesterday's procedural victory to start debate on repealing parts or all of Obamacare or just simply reworking it, the Senate voted on the GOP's plan to repeal and replace it which failed. Then, they voted on a plan focusing on repeal only, replace sometime down the road. That failed. Then they voted on a plan to start over. That failed.

Now, they're going to try for what's called -- what they're calling the skinny repeal as part of a free-for-all amendment process which is going to be riddled with potential land mines, both political and legislative.

Today, McConnell acknowledged that there is a bumpy road ahead.

(BEGIN VIDEO CLIP)

MCCONNELL: Ultimately, we want to get legislation to finally end the failed Obamacare status quo through Congress and to the president's desk for his signature. This certainly won't be easy. Hardly anything in this process has been.

(END VIDEO CLIP)

TODD: There's a wry smile out of him.

And as I said at the top of the show, what happens next is anyone's guess.

I'm joined my MSNBC's Kasie Hunt from Capitol Hill, also our NBC News Capitol Hill Correspondent. And "The Washington Post" Robert Costa who is also an MSNBC Political Analyst.

Kasie, I want to start with you. It feels as if all of this health care debate -- everybody knows -- all these different health care votes that are being held, everybody knows the result. So, they're banging their head against the west wall. Then, they're bagging their head against the east wall. Then, they're banging their head against the south wall. What's the end game here?

[17:05:00] KASIE HUNT, MSNBC CAPITOL HILL CORRESPONDENT: At this point, Chuck, I think the end game is to try to get something, anything that will allow them to move forward.

I think they want to be able to declare a win. I'm not sure that anybody feels very confident that they're going to get to that point. I mean, look, what they're talking about is such small ball compared to, you know, what originally this started out to be.

And they've spent weeks doing all of these negotiations over Medicaid and taking, you know, quite frankly, so much heat in the public and making the Affordable Care Act more popular than it really has ever been.

And now, it's looking like they think that they can get the votes for the medical device tax. And it's unclear whether they can get the votes to repeal the individual mandate because they're worried if they do that, it's simply going to break the individual market. So, there might not be enough Republican votes there either.

So, look, everybody is, I think, a little bit worn out and worn down on this issue. And also, a little bit nervously watching the insurance markets which are, you know, having more trouble than they -- than they had previously because there is so much uncertainty.

TODD: It seems as if, Kasie, they haven't come -- they haven't been able to come up with the face-saving way to say they have to move on. Is there any talk about what that looks like when they have to come to grips with the fact they're not going to have anything that's good enough to create a conference committee with the House and do what the House did? Have they even thought about what that looks like yet?

HUNT: Well, and, you know, they've also essentially started to dismiss a little bit this conference idea because it would be so messy. It would involve Democrat. It would drag this process even further. So, they're talking about an informal conference.

I think this is actually a place where the president has made it a lot harder. I think the way McConnell has designed what we've seen over the last 24 hours was essentially to show the White House that, look, the support is not there. It's not there for repeal and replace. It's not there for repeal and delay.

So, now, you're right. They have to figure out a way to get out of this. I think it's going to look like whatever small things they can pull together in this, quote, unquote, "skinny repeal." Which, I will add, is language that Republican aides don't love. They don't like that it's been getting bad branding.

TODD: Yes.

HUNT: So, that's a whole other struggle as well.

TODD: Bob, let me go to you for the take, sort of, from the White House perspective here. But I want to start with Sessions. Where are we right now on Jeff Sessions?

ROBERT COSTA, MSNBC POLITICAL ANALYST: Chuck, it's a cold war between the long-time Trump confidant and the White House. And you have the -- you have Attorney General Jeff Sessions, really, not on speaking terms with the president of the United States.

We've reported here at "The Post" that his chief of staff, Jody Hunt, has been, sort of, an emissary for the attorney general, going to the chief of staff, Reince Priebus, asserting that the -- that Sessions will not resign, has no interest in stepping down.

And that's where we are. The situation where the president is doing everything he can to try to force his own attorney general to quit, but the attorney general just won't do it.

TODD: I don't understand why the -- why the chief of staff for Jeff Sessions is going to Reince Priebus, at this point, when it's painfully obvious the president doesn't listen to him.

COSTA: Well, there needs to be some point of contact. And Jody Hunt, our sources tell us, has a relationship with Priebus that he can at least make clear where the attorney general stands.

The difficult situation for the Justice Department is they're pursuing all of these Trump policies on law enforcement, on immigration. And they feel like this is his dream to stay there.

And so, they know that all these pressures from the White House is to quit but they know, personally, he just doesn't want to do it.

TODD: Is it -- we saw today with the whole Lowell Brooks, one of the candidates to replace Jeff Sessions, said, hey, if this is what happens, I pledge to withdraw. If everybody with draws with me and we'll get Sessions, basically, his Senate seat back. Does that interest Jeff Sessions at all?

COSTA: I had breakfast with Congressman Brooks this morning. And at that breakfast -- he's struggling right now in the polls trying to make this runoff in the Alabama Senate primary.

But McConnell, the majority leader, and Senator Luther Strange who has replaced Senator Sessions, they have a pretty tight bond. They're spending millions of dollars to keep Strange U.S. Senate.

So, there's talk in Sessions world about maybe wouldn't it be nice if he could go back to the Senate? But most people who are at the upper echelon of power right now, on both sides, say that's not a realistic possibility.

TODD: Wow, quite the drama on every -- I would just say, on both sides of Pennsylvania Avenue but, frankly, it feels like every side street on the way between the White House and Congress on Pennsylvania Avenue.

Kasie Hunt, Bob Costa, thank you, both. Appreciate it.

HUNT: Thanks, Chuck.

TODD: I'm joined now by Republican Senator Mike Rounds of South Dakota. Senator Rounds, welcome back to the show, sir. Good to see you.

SEN. MIKE ROUNDS (R), SOUTH DAKOTA: Thanks, appreciate it. Sounds like you guys are going to have to get time and a half overtime.

TODD: Well, I appreciate you acknowledging that. Speaking of time and a half and the votaramas (ph) that may or not be coming, you've got some all- nighters potentially ahead of you.

[17:10:00] Explain to me this. If I'm a layperson -- we get caught up in the process. You know the process well. I know the process well.

And there's part of me that says, well, this is just what happens. You have to play all these scenarios out.

So, yes, you do have to bang yourself against the wall a few times to do pointless votes. How do you explain this to the public?

ROUNDS: It's hard because, in many cases, a lot of us are still learning it as well. The idea behind it is that it's what they call a privileged plan. When we do reconciliation, we're taking the House budget, the Senate budget and putting it together. And we do it with 51 votes.

But since it's 51 votes, it means that every single proposal has to be scored to see what it does to the budget. We have to go to the CBO to get that done.

If the CBO hasn't got the amendment scored, then you have to have 60 votes to put the amendment on this bill. And it makes the bill, then, a 60 vote.

So, Dems, on one side, are going to do everything they can to create this process in which it becomes 60 votes to get passed which means it dies or Republicans are doing everything to try to get their bill scored and proposed.

ROUNDS: I think this thing will move to a conference committee. I'm -- I guess I'm -- maybe I'm just an optimist, but --

TODD: What (INAUDIBLE)? What is it that -- what does this look like? I mean, that's what the -- that's what we're all struggling with here. Those covering, I think you voting. What does this look like?

ROUNDS: I think that's the reason why you saw a couple of votes yesterday just to, kind of, take the measure of how close we would be to 51. The original Senate McConnell bill that replaced the House bill to begin with, along with the Cruz proposal and the Rob Portman amendment, were designed so that we could see the strength of that combination together.

Now, you've also got a new one out there which is floating around, and that's the Graham amendment with Bill Cassidy, so Cassidy-Graham. And this one would basically block grant this money back for health care coverages the states, and let the governors in the individual states, with the resources they've got, create and utilize the money to do what their people think is the best for health care within their individual states, just as another alternative.

But I think one of the reasons why we're not simply doing it in the Senate is they have to be scored. And, right now, we're in session. We're going to be in session basically without a break until such time as we're done with this votarama.

TODD: Let me just ask you, though, philosophically. Do you believe the government has a responsibility to help provide health care for all Americans?

ROUNDS: I think government, right now, accepts that they should be part of it. Remember, insurance is a regulated industry, whether you do it at the state level or at the federal level.

We also know that we have a safety net in Medicaid which has become a part of this, an integral part of it. But Medicaid has expanded because of Obamacare.

And right now what we know is that it is not sustainable in its current form. So, simply to say that we would do nothing is like admitting defeat because we're going to have people that get hurt. South Dakota, as an example, has gone up 124 percent since 2014. It's going to go up between 20 percent and 40 percent next year alone. That's not sustainable.

I can't sit here and go home and tell everybody, ah, we couldn't get anything done. And we didn't try it and you're just stuck with it. I mean, Congress did this to people. Now, we've got to find a way to help people get out of it.

And it'd be great if we had Democrats working with us. But, politically, they see this as our waterloo, --

TODD: Well, --

ROUNDS: -- and they're not going to help us at this stage of the game.

TODD: -- I understand that you want to pin the blame on -- fully on Democrats here on the predicament that you're in. But I want to play a little bit from John McCain yesterday, because he cast the blame on everybody. Here it is.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: We keep trying to find a way to win without help from across the aisle. That's an approach that's been employed by both sides, mandating legislation from the top down without any support from the other side with all the parliamentary maneuvers that it requires. We are getting nothing done, my friends. We're getting nothing done.

(END VIDEO CLIP)

TODD: I guess, Senator, call the Democrats' bluff. As you know, many Democrats have said, if you get out of this reconciliation process and say, look, at this point, it's clear the best you guys can agree to is more of a reform of Obamacare, not a full repeal and replace, which is where the Democrats are. Why not pull reconciliation and take John McCain's advice?

ROUNDS: Because, at this point, we don't think that they're actually interested in providing us relief. And, look, we're talking with friends on the other side of the aisle. They've made it very clear that the first step has got to be ours. They recognize that this is a political opportunity.

And even our good colleagues on the other side say, look, there are certain things that you cannot touch. You cannot touch Medicaid. That's a nonstarter.

And we're looking at this saying, yes, but it's not sustainable. This is an opportunity to actually start to reform Medicaid, to slow down the increases into the future. When you -- when they start laying these things out, saying that's not a doable deal, or if they come back in and say, and by the way, we want the concept of Obamacare to continue on.

[17:15:02] And our message is when you don't have any competition and you've run all the competition off, that's not going to work.

So, our -- look, eventually, I really do believe that Republicans and Democrats will find ways to fine tune it, but we've got to change the direction of health care in this country. I wish this was not on a partisan basis. It is. We're recognizing it. We've got to take the first steps.

And it's the best we can do right now. But we're running out of time, because come January first, we're going to have fewer markets out there under Obamacare. Everybody is recognizing that. But we can't --

TODD: But (INAUDIBLE) yes, I understand.

ROUNDS: -- simply sit back and say, we're going to wait another year.

TODD: I've got to ask you about what's going on with Jeff Sessions.

ROUNDS: Yes.

TODD: How do you think the president is handling this?

ROUNDS: You know, the president has a knack for choosing very, very good people for his different positions. Secretary of state, secretary of defense and the attorney general.

I think the president made the right move when he chose Jeff Sessions. I have a huge amount of confidence in Jeff Sessions, and I want to see him stay on board because he truly does believe in the rule of law.

And you may not agree with him on some of the concepts, but the one thing I guarantee you, enforce the law the way it's written. He won't try to write his own laws.

TODD: Let me ask you this. If the president fires him, it's clear he's firing him over a decision to basically act ethically. Do you find it would be your duty not to then confirm any attorney general nominee that the president appointed, considering that the only thing he seems to care about is the issue of recusal?

ROUNDS: You know, the evidence right now suggests that the president clearly understands that he shouldn't be doing that because he has not done it, although he has the opportunity to do it. And so, I'm not going to take the hypothetical and suggest of what we would do.

All I can say is this president made a very good choice the first time around, and I think he should trust his own judgment.

TODD: All right, Senator Rounds, I'm going to leave it there. As always, sir, I appreciate you coming on and sharing your views.

ROUNDS: Thanks, appreciate it.

TODD: Coming up, Republicans in Congress take sides in the Trump Sessions show down. You just heard another Republican senator take the side of Jeff Sessions against the president.

We'll be right back.

(COMMERCIAL BREAK) TODD: Here's a look at what's happening at the White House at this hour. The president is expected to announce a new plant to be built in the state of Wisconsin for the Taiwanese technology supplier Foxconn.

Republican Governor Scott Walker and House Speaker Paul Ryan, since it's his home state, are both in attendance, you're seeing there, getting ready for the president.

Foxconn produces iPhones for Apple and has been under fire in the past for its labor practices. The company announced back in June that seven U.S. states were being considered for new display panel manufacturing plants. President Trump told "The Wall Street Journal" that Apple CEO, Tim Cook, had promised to build, quote, "three big beautiful plants in the United States." Apple declined to comment on what the president said.

[17:20:00] It's unclear if they are involved with the White House announcement today since it is Apple related. Either way, this is the president doing a little jobs' announcement at the White House, sort of your smart messaging political strategy.

Anyway, more MTP DAILY in 60 seconds.

(COMMERCIAL BREAK)

TODD: Welcome back to MTP DAILY.

While President Trump is leaving his attorney general's state in limbo, members of his own party, many of them Jeff Sessions' former Senate colleagues are coming to the attorney general's defense.

But the way the president is openly venting his frustrations with the A.G. brings up a fundamental question of the Trump presidency thus far. What is the red line for Republicans? Are they reaching a point where they say enough is enough and choose character over party?

Let me bring in tonight's panel. Ken Vogel is a political reporter for "The New York Times." Amy Walter is national editor for "The Cook Political Report." And Michael Steele is the former chairman of the RNC and an MSNBC Contributor.

Mr. Steele, I'm going to start with you. This is your party here. You've got your finger on the pulse.

MICHAEL STEELE, MSNBC CONTRIBUTOR: Such as it is.

TODD: Such as it is. Where are we -- I mean, this, sort of, like -- the Sessions-Trump feud is just a head scratcher in so many ways.

STEELE: It's ridiculous, yes.

TODD: Because when you think about the core issue that put Trump on the map, immigration, there is nobody that he's more mind melded with and nobody that has more bona fide with the tough on immigration crowd --

STEELE: Yes.

TODD: -- than Jeff Sessions.

STEELE: Absolutely.

TODD: This is, to me, a terrible base move.

STEELE: And the one guy who, you know, ostensibly has been carrying out the president's agenda since he's been in office. I mean, --

TODD: The only having real success.

STEELE: So, you want to take him out which leads everyone into the corner of belief that, well, this is really about the Russia thing and wanting to control that process inside the FBI that touches on the things that may touch on Trump.

Having that said, Republicans by and large, and I think the president got a strong whiff of it this week, have a very, very bright line that they have drawn when it comes to someone like Sessions. He's our guy. He's there for you. He's helping you. Hands off.

You heard Rush Limbaugh say it. You heard Mark Levin say it. You have other conservatives, both politically and in the media, come out and make it very clear, Mr. President, this is not the pathway you want to go down.

TODD: And what did President Trump do when he saw all that, he hit him again today.

STEELE: He tweeted out again today.

AMY WALTER, NATIONAL EDITOR, "THE COOK NATIONAL REPORT": You know, one story that hasn't been getting a whole lot of attention but was out in "The Wall Street Journal" today was a story about -- going right to your point, about how where the Trump administration is even undercutting Sessions on his other big issue which is criminal justice reform.

He has been working within the Justice Department to roll back a lot of the Obama era work on criminal sentencing. Sessions thinks we need to get tougher on mandatory sentences. The Obama administration, of course, did not.

Jared Kushner, apparently along with some Republicans in the House, doing their own meetings, basically saying, maybe we'll roll some of those things back, the things that Sessions is talking about. And it's directly attacking Sessions on the issues he cares deeply about.

It's one thing to go attack him on Twitter and attack him on Russia. But on the things that he cares most deeply about and he actually has been more -- the most ideologically connected to, immigration and criminal justice reform. If he gets undermined on those, that's what is making his life even tougher than the stuff with the tweets.

TODD: You know, Ken, I've been having my own flashbacks to the 1990s when it came to Bill Clinton. It was an open secret in Washington. If Janet Reno would have resigned, he would have -- they would have popped champagne corks, OK? Hillary Clinton and Bill Clinton, they were desperate. They were -- because of the Ken Starr appointment.

In the same way this president is, sort of, just out of his mind about the recusal, the Clintons -- the Ken Starr decision is something they -- I don't know if they will ever forgive. But they didn't make it public. An open secret, but they didn't flog her publicly.

KEN VOGEL, POLITICAL REPORTER, "THE NEW YORK TIMES": Right. And flogging her, flogging Jeff Sessions is one thing. But actually getting rid of him would be so untenable. Not only would you have to get someone else through the Senate, this body where there are already loyalties being -- Jeff Sessions has deep loyalties. And you have people coming to his defense.

[17:25:10] But it would really add to this narrative that Trump -- you know, you talk about the Trump investigation and a lot of people's eyes glaze over. A lot of voters don't really care about it. They don't follow it.

But one thing that they do understand, and polls show this and they showed after Trump got rid of Comey, was that they understand this idea of a coverup. And getting rid of Jeff Sessions would fit into that -- fit into the narrative, you know, getting rid of Comey. That the call for Sessions to get rid of Rosenstein as opposed to Trump doing it himself. Those are all (INAUDIBLE) that I think is politically damaging.

TODD: What's amazing is how much he just thinks Sessions loyalty was disingenuous as well. Listen to the audio portion of this interview with "The Wall Street Journal" from a couple days ago. Take a listen.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: He looks at 40,000 people and he probably says, what do I have to lose? And he endorsed me. So, it's not like a great, loyal thing about the endorsement. But I'm very disappointed in Jeff Sessions.

(END VIDEO CLIP)

WALTERS: I think that says as much about Donald Trump as it says about Jeff Sessions, right? What would you do if you had 40,000 people cheering for you, isn't that the greatest thing you could ever imagine? That's what drives people is that adoration. That's what his book -- to me, that's what that quote said was, that's what is -- it inspires me and it drives me.

TODD: He endorsed me --

WALTERS: So, of course, --

TODD: -- to ride my (INAUDIBLE.)

WALTERS: -- other people -- exactly. Of course, other people are going to want that same thing.

STEELE: And Jeff Sessions could give a rat's patootie about 40,000 people at a Trump rally back in the -- he was there on principle. He was there because, remember, this was a United States senator who was bucking the trend.

TODD: On immigration.

STEELE: He had his -- no, but he had his colleagues who were running for president that everyone was, kind of, lining up behind.

TODD: And the whole establishment was (INAUDIBLE.)

(CROSSTALK)

STEELE: The whole establishment (INAUDIBLE) the trend.

TODD: Jeff Sessions -- while people personally like Jeff Sessions, he was, sort of, on his own on immigration.

(CROSSTALK)

TODD: -- He was, sort of, an island in the Senate on immigration. He was, sort of, an island in the Senate.

WALTERS: And on this criminal justice stuff he was on an island. He has the best job he could ever have that he wouldn't have gotten in any other administration.

TODD: Yes. I don't -- I feel like we haven't done health care here because right now -- you know, we should be split screening and you're seeing -- it is -- we know that whatever they come up with isn't going to - - isn't going to last -- isn't going to be lasting. What are we doing?

VOGEL: I mean, it's really an impossible situation that -- you know, that they're in and they're not getting any support from Trump. And Trump is out there saying, they, and calling out specific Republicans by name instead of doing the types of things that might bring them along.

I think the ship has sailed. I think that McConnell is trying to salvage something from it, but there's really no -- it's not -- it's a no-win situation, at this point.

TODD: It is -- and how much is this Sessions -- I think the Sessions situation, it certainly doesn't help. I think it hurts. Do you?

STEELE: Oh, I think it does. I think it puts a --

TODD: Health care, yes.

STEELE: -- I think it puts a pause in the health care argument. I mean, if the president's willing to go after someone like Sessions, why would we expose ourselves in any other way? Why would we go out on that limb to what if?

TODD: He's going to blame us for any problems and take credit for everything.

STEELE: (INAUDIBLE.) Right, exactly. So, they're, you know, kind of, sort of, stepped away through this thing.

I said it at this table months ago. Next year, Obamacare will be the law of the land. The year after that, it will be the law of the land. And Republicans will eventually come to the spot that pretty much everyone is at right now.

And John McCain said it very clearly yesterday. You're going to have to come to that sweet spot with bipartisanship to get this done.

TODD: Wait. If I hear it (ph) one more thing, the medical device tax. I mean, it's almost, like, the medical device tax is now, like, being held up as the great reform that they're going to make.

All right, guys. You guys are sticking around.

Later in the broadcast we are going to talk about when President Trump announced today that the U.S. military will no longer accept or allow transgender people in the military. Was he simply trying to distract attention from either the Jeff Sessions controversy and health care? That's coming up in a few minutes.

(COMMERCIAL BREAK)

CHUCK TODD, MEET THE PRESS DAILY SHOW HOST: It's now time to report the best news of the day. Louisiana Congressman Steve Scalise is out of the hospital, six weeks after being shot during a congressional baseball practice. The congressman was discharged from MedStar Washington Hospital Center yesterday and will begin a period of in-patient rehabilitation for the injuries Scalise suffered to his hip.

The hospital said he is in good spirits and looks forward to returning to Capitol Hill following his rehabilitation. Great news on that front. Up next on "MTP Daily," what does President Trump mean when he warns of big, big problems for Iran regarding the U.S.-Iranian nuclear deal. We are going to try to get some answers on that when we come back. But first, Hampton Pearson with the "CNBC Market Wrap."

HAMPTON PEARSON, CNBC WASHINGTON BUREAU CORRESPONDENT: Thank, Chuck, and welcome back. We had stocks closing higher on Wall Street today following strong earnings. The Dow gaining 97 points, the S&P added a fraction of a point, the Nasdaq closing up by 10. Boeing jumped 10 percent, its biggest gain in almost nine years after reporting strong second quarter earnings.

Facebook also reporting better than expected sales and profit growth. The social media giant says two billion people use the site each month. The Federal Reserve says the Central Bank will keep interest rates unchanged and will soon start reducing its $4.5 trillion balance sheet. That's it from CNBC, first in business worldwide.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: The Iran deal, which may be the single worst deal I've ever seen drawn by anybody, if that deal doesn't conform to what it's supposed to conform to, there's going to be big, big problems for them. That I can tell you. You're going to see that.

(END VIDEO CLIP)

TODD: Welcome back. That was President Trump last night in Youngstown, Ohio, and he wasn't just playing that up for the crowd. In an interview with the Wall Street Journal earlier that same day, he floated the idea that the United States might not continue to move forward with the Iran deal, the way the country has so far.

It's important to remember, every quarter, the administration has to notify congress whether or not Iran is -- has complied with its obligations in the nuclear deal. In the write up of the president's interview, the journal says, quote, when certification comes up again, Mr. Trump says he believes Iran will be judged not compliant with the agreement.

He said he would be prepared to overrule his own advisers in proclaiming that Iran hasn't met the terms of the agreement. Quote, we've been extremely nice to them in saying they were compliant. Mr. Trump said, personally, I have great respect for my people, but if it was up to me, I would have had them noncompliant 180 days ago.

President Trump said this on the same day that the house overwhelmingly passed a bill that imposes new sanctions not just on Iran, but Russia and North Korea. And after weeks of back and forth, it did finally pass, and it passed overwhelmingly, 419-3. It looks like there still might be a little bit of a hang up in the senate.

We're going to get to that as well. Joining me now is Republican Congressman Ed Royce of California. Of course as chairman of the House Foreign Affairs Committee, he is the one that has been shepherding this bill. Mr. Chairman, welcome.

REP. ED ROYCE (R), CALIFORNIA: Chuck, good to see you.

TODD: Let me start with the president's comments on the Iran deal because what's interesting to hear him say it and the way you've described the Iran deal before is, you have said, yes, they may be compliant, but you thought the deal was badly worded.

Let's set that aside. You and the president I think agree on that aspect of it. What is the ramifications, though, if the president overrules his own advisers who if they technically are abiding by the deal, even if you spiritually don't believe they are?

ROYCE: Well, here is the difficulty. Right now, we've lost that leverage, right, the 150 billion arguably somewhere in that neighborhood of relief has already gone into the coffers of the Iran and Revolutionary Guard Corps because they own most of the companies in Iran.

So, at this point, the toothpaste is already out of the tube in terms of any leverage we have on that. So I guess that's the conundrum.

TODD: You can't get them to renegotiate.

ROYCE: Right.

TODD: So if you can't get them to renegotiate -- look, we change parties in our leadership all the time.

ROYCE: Right.

TODD: If we start-up ending agreements that a previous party does, what does that do down the road? What is the unintended consequences?

ROYCE: Exactly. So the question here is, you know, how do you just get compliance on this agreement, right, while we turn our attention to what is maybe the more vexing long-term problem with their development now of intercontinental ballistic missiles.

TODD: Do you think you can do both?

ROYCE: Yes, I think you try to keep them compliant with the agreement. We know that their agents have met with German agents trying to get certain technological expertise that they could deploy into the nuclear weapons program. But we just try to stay on compliance, hold them accountable.

But then we need to address, I think, and we do this with this new legislation, bipartisan legislation as you said that will focus on their missile program, because that's where they're rushing forward at the moment.

TODD: All right. But I want to go back to the initial question. What is the president we would send, if the president essentially overrules and did that where, you know, secretary of state said they were compliant technically, but he simply doesn't like this agreement, what is the ripple effect of that?

ROYCE: Well, I think the difficulty here is what's to be gained by that approach, having already lost the ability to deploy pressure internationally. That's been given up in the original negotiations.

TODD: Do you think it's better leverage to just enforce the agreement as strenuously as you can?

ROYCE: At this point, that's what you have to do, and at this point you look at the other long-term problem which is this agreement will expire at the end of 12 years. At that point in time, what do we do if they have a hundred ICBM? We have to prevent them from developing the ICBM.

TODD: All right. I want to move quickly first to the Russia aspect of this bill, this new sanctions bill. The White House has not said whether they're going to sign this yet. Do you think the president will sign this bill?

ROYCE: I think the president will sign it.

TODD: Why?

ROYCE: I think he will sign it because of the strength of the vote you saw on the house floor. Four hundred nineteen to three is a very strong margin and 92-2 in the senate. So, the important point is to get this bill up and out of the senate soon.

TODD: Let me ask you this.

ROYCE: Yes.

TODD: He did veto it, you guys passed this with veto-proof majorities, will that likely --

ROYCE: Yes.

TODD: They would override that --

ROYCE: Yes.

TODD: So he almost -- he's in a no -- he almost has to accept it.

ROYCE: Correct.

TODD: All right. There is a little bit of kerfuffle between you on the house side of things and Senate Foreign Relations Chairman Bob Corker who doesn't like what you did on the North Korean sanctions front, which is I believe the senate would like to have congressional oversight before the president could pull back sanctions.

The house bill doesn't do that. What's going to happen here? Do I have this right? I'm trying to get this right.

ROYCE: No. I think the main argument here has to do with North Korea.

TODD: Right.

ROYCE: I think you've identified that. And I think part of the problem is close to three months ago, we passed a North Korean sanctions bill into the senate. We passed that one on the house floor 419-1. And so the senate has had three months to look at this. In the meantime, we had a negotiation, two weeks we sat down with the representatives of the senate and the house.

Republicans and Democrats. We worked out the legislation that we passed yesterday into the senate. The senate has had input there. And the reason North Korea is in that bill is because North Korea, we found out yesterday, has fast-forwarded their ICBM program and are now rather than years away --

TODD: Right.

ROYCE: -- are a very short time away from being able to launch and hit the United States.

TODD: So you added North Korea.

ROYCE: Yes.

TODD: Is this going to go to conference or does the senate now need to pass your bill?

ROYCE: The senate needs to pass this bill back to the house and they need to do it --

TODD: So you don't have to do conference.

ROYCE: -- at the end of is this week. Exactly. I mean, we can wrap this thing up right now. And I think we're very close to getting that done.

TODD: And this gets on the president's desk you think next week.

ROYCE: I think at the end of -- yes. I think maybe Friday.

TODD: All right. Ed Royce, house foreign affairs chair. Thanks for coming down.

ROYCE: Thank you very much, Chuck.

TODD: Appreciate it. Up next, the strangest thing has been happening in Alabama.

(COMMERCIAL BREAK)

TODD: Welcome back. Tonight I'm obsessed with what is turning into a very strange special election in Alabama, and that's not just a play on the name of the state's new senator, Luther Strange.

Strange, on the left is running in a special election against among others Congressman Mo Brooks, and race is really has turned into a battle over who can hug President Trump the closest. In fact, a group aligned with Senate Majority Leader Mitch McConnell ran an ad attacking groups for not being pro-Trump enough.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Mo Brooks even refused to endorse Donald Trump for president.

REP. MO BROOKS (R), ALABAMA: A lot of people who have supported Donald Trump, they're going to regret having done so.

UNIDENTIFIED FEMALE: Mo Brooks attacked President Trump, siding with them, not Alabama conservatives.

(END VIDEO CLIP)

TODD: But here is the problem. Strange and Brooks are running to replace the man who left the senate to become the attorney general for President Trump, a man named Jeff Sessions, the same Jeff Sessions who is being belittled, humiliated, and cyber bullied right now by President Trump.

So what do you do now if you're Luther Strange or Mo Brook? Do you still go with a plan A and cling to a a president who is extraordinarily popular in Alabama or you switch to a plan B and stand by your man whom you elected four, count them four times, to be your state's U.S. senator.

Well, Mo Brooks has one answer. Today after condemning what he called President Trump's public waterboarding of one of the greatest people Alabama has ever produced, unquote, Brooks made the following offer.

I alluded to it earlier. He'll withdraw from the senate race if his opponents do the same and allow Sessions to return to the senate. All right. Seems like a smart play. Your move, Senator Strange.

(COMMERCIAL BREAK)

TODD: Welcome back. See, time for "The Lid." Panel is back. Ken Vogel, Amy Walter, Michael Steele. I want to talk about President Trump's announcement today that the U.S. will no longer, quote, accept or allow transgender people into the military. I have to admit when I read the president's tweet this morning, my first thought was, don't talk about health care votes or mistreatment of Jeff Sessions, try talking about this.

And sure enough, all of cable in those first couple of hours talked about this. But the stunning aspect of it is I want to get at that aspect, but there's a rebuke of this policy announcement by a set of Republicans that range from Orrin Hatch and Joni Ernst to some of the more moderates that you might say are usual suspects (ph). Amy Walter, are you surprised?

AMY WALTER, NATIONAL EDITOR, COOK POLITICAL REPORT: Well, remember, the house had vote on something similar. I guess it was a couple of weeks ago about gender reassignment surgery that about 25 Republicans supported this against the wishes of a lot of conservative Republicans.

So, you already knew that this was not going to be a clean cut of a D versus R conservative versus liberal issue at the get-go. And at the same time, we thought that this was going to be a distraction issue. But right now, the president is standing with (INAUDIBLE) at the White House where it really should have been today, right?

TODD: Yes.

WALTER: If he really want to have a good distracting issue, jobs, jobs, jobs, economy. Not this. If that was really all about distraction, this would have been a much easier one.

TODD: Ken, there's also been some reporting that indicates that the house leadership was frustrated that this divide about what to do of can the -- does the government pay for gender reassignment surgeries act of duty, you know, is that -- it's literally we've seen a RAND Corporation study on it.

I mean, this is really negligible impact on the (INAUDIBLE). Is this the house Republicans desperate for the president's help on this bill or was this a Steve Bannon, let's have some cultural war fun today?

KEN VOGEL, REPORTER, THE NEW YORK TIMES: I think it was a little bit of both. I mean, that dispute was still sort of simmering beneath the surface of the spending bill that they have to pass and they were some conservatives in the house who were threatening, making noises about potentially withholding their support if this was an address.

So Trump addresses this and Trump throws a bone to the Republican base on an issue that we should note was not one that he campaigned on. In fact, he said that he would be better for the LGBTQ community than Hillary Clinton and a way it disturbed a lot of Republicans. Nonetheless, here we have him sort of reaching out to them with this piece of red meat.

TODD: I wonder if the White House is taken aback at some of the backlash they got from the senate side. Take a listen to Senator Orrin Hatch, Michael Steele.

(BEGIN VIDEO CLIP)

SEN. ORRIN HATCH (R), UTAH, PRESIDENT PRO TEMPORE OF UNITED STATES SENATE: They don't choose to be transgender. They were born that way. Why should we hold that against them? They are human beings. Many of them are extremely talented human beings. We should be open to everybody.

(END VIDEO CLIP)

TODD: I am just -- Orrin Hatch from the conservative state of Utah reminding his constituents that transgender folks are born that way.

MICHAEL STEELE, FORMER RNC CHAIR, MSNBC POLITICAL ANALYST: Yes. I think there's a growing sentiment in the Republican Party over the last few years that has moved away from some of the old thinking in this regard. A lot of it comes from the fact that it's a family member, relatives, someone in the neighborhood I know.

And so this idea that now we're going to revisit don't ask, don't tell for transgender community is just sort of stunning for a lot of people. This is the what, the fifth, sixth distraction in the last few days that this administration has thrown up.

What's unfortunate about this, it goes to what Ken was saying. This is not where the president was in the campaign. It's not where the president has been in the past. It's not believable.

TODD: Ken Vogel, the first time I heard any major presidential candidate, and in this a nominee use the "Q" in LGBTQ, OK, was Donald Trump.

STEELE: Right.

WALTER: at the convention.

(CROSSTALK)

TODD: You know, look, a lot of folks in the gay and transgender rights community said don't believe it. It's not believable. Now obviously, they can say, hey, he wasn't going to be somebody that was going to be very pro- LGBTQ rights. But, that's the way he campaigned.

VOGEL: Yes. You know, there's a lot of disappointment I think in that community not just towards him but towards Jared Kushner and Ivanka Trump who were seen as a real progressive influence on him both within the campaign and the administration.

If you remember, they came out and scuttled what was a proposal that didn't materialize sort of related to not to this exact issue but related to LGBTQ rights. And so now you have sort of the full reversal.

TODD: Amy, I can't help but think that this is part of the old Roger Ailes playbook, you know, which is, hey, things aren't going well on substance, let's throw a distraction out there.

Look, the Democrats are going to come running, the elite media is going to come running, and it will look like, oh look, the coast is out of touch.

WALTER: The old deal cultural war divide which the president did very well in exploiting in 2016. The difference right now of course is that he has a whole bunch of other issues that while you might be able to distract for a couple of minutes, they're not going to go away.

You know, we can talk about this today. Tomorrow we're going to talk about health care. We're still going to be talking about Russia. We're still going to be talking about a whole host of other issues.

VOGEL: He's still going to be talking about Jeff Sessions.

WALTER: He's still going to be talking about Jeff Sessions.

TODD: By the way, very quickly, Rex Tillerson said today he's not going anywhere.

STEELE: He's not going away.

TODD: He finally ended that (INAUDIBLE).

STEELE: He's not going to do it.

TODD: He kept that out there for a few days. That was on purpose. He was rattling a cage.

STEELE: Absolutely. He was sending a signal that I'm with Sessions.

(LAUGHTER)

WALTER: What is it going to lead to? Does that means he is going to get people that he want in place in the state department?

TODD: We're going the find out pretty soon. Guys, thanks for helping me ease my way back in. All right. After the break, marking a very important date in the history of law enforcement.

(COMMERCIAL BREAK)

TODD: In case you missed it, one piece of sensitive information the FBI is not redacting, its birthday. The nation's principal law enforcement agency was founded on this day in 1908. It was the brainchild of Charles Bonaparte, Teddy Roosevelt's attorney general and grand nephew of the famous French Bonaparte.

As a reformer, he wanted to use the DOJ to crack down on crime and corruption. But only had a couple of agents at his disposal. When the Justice Department needed investigators in the field, they would borrow agents from the Secret Service. Congress thought this was a power grab by the Roosevelt administration, so it banned the practice.

With Roosevelt's blessing, Bonaparte hired his own force of investigators and placed them under a chief examiner, which later grew into the modern bureau. These agents were charged with conducting investigations for the Justice Department. Yes, the FBI stems from the Department of Justice despite what you may have heard recently.

And a reminder, we expect the senate to confirm Christopher Wray as the new FBI director before the August recess. So, it's likely he will be the one to blow out the candles next July. That's all for tonight. We'll be back with a lot more "MTP Daily" tomorrow.

"The Beat with Ari Melber" starts right now. More importantly, for me, the beat for the first time I hand the baton over. Mr. Ari Melber, how are you, sir?

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