The Rachel Maddow Show, Transcript 8/1/17 NPR: False Seth Rich Story

Guests: Joy Vance, McKay Coppins, Charlie Savage, Vanita Gupta, David Folkenflik, Brian Beutler, Karine Jean-Pierre

Show: THE RACHEL MADDOW SHOW Date: August 1, 2017 Guest: Joy Vance, McKay Coppins, Charlie Savage, Vanita Gupta, David Folkenflik, Brian Beutler, Karine Jean-Pierre

EVAN MCMULLIN, FORMER PRESIDENTIAL CANDIDATE: -- wants the legislative branch to interfere as little as possible. This is not a normal -- such a normal situation. This is a president who obviously has an unhealthy relationship with Russia. That`s the real motivation for his resistance and attempt to weaken and stop these oppositions.

CHRIS HAYES, MSNBC HOST, "ALL IN": Julia Ioffe --

JULIA IOFFE, THE ATLANTIC: Sure, but it isn`t the only time a White House has tried to interfere with --

MCMULLIN: No, but this is not like those situations.

IOFFE: Agreed, agreed.

HAYES: Julia Ioffe and Evan McMullin, thanks for joining me.

That is "ALL IN" for this evening.

THE RACHEL MADDOW SHOW starts right now with Joy Reid in for Rachel.

Good evening, Joy.

JOY REID, MSNBC HOST: Thank you so much, Chris. Appreciate it.

And thanks to you at home for joining us this hour. Rachel has the night off.

Now, we do have a lot to get to tonight, including some late-breaking news from "The New York Times" about a major policy change the Trump administration is currently floating. We have the reporter who broke that story here tonight. You do not want to miss it.

But, first, we have more to unpack from that blockbuster report in "The Washington Post" that we brought you last night concerning the meeting that took place in June of 2016 between Donald Trump Jr., Trump`s son-in-law Jared Kushner, Donald Trump`s then campaign manager Paul Manafort, and a number of Russian nationals with ties to the Kremlin.

That meeting was made public earlier this month in a "New York Times" report published on July 8th when "The New York Times" first reported on this meeting.

They included a statement that purported to be from Donald Trump Jr. who explained, quote: It was a short introductory meeting. I asked Jared and Paul to stop by. We primarily discussed a program about the adoption of Russian children that were active and popular with American families years ago and was since ended with the Russian government. But it was not a campaign issue at the time and there was no follow-up. I was asked to attend the meeting by an acquaintance but was not told the name of the person I would be meeting with beforehand.

Well, it`s since been revealed that that statement was not accurate. The meeting in question was much longer than a short introductory and we know, thanks to the email that Donald Jr. later published himself that the original stated purpose of the meeting was to pass along dirt on Hillary Clinton from the Russian government to help the Trump campaign. That offer caused Trump Jr. to write back, I love it.

So, we know that what the president`s son went to that appointment, what he was expecting was not, as his statement later said, a short introduction and some talk about adoption. He went to that meeting expecting to get dirt on Hillary Clinton that he believed would help his father win the election. "The Washington Post" reported last night that Trump Jr.`s inaccurate statement about that meeting was dictated by his father, the president of the United States, while he was on board air force one on his way home from the G20.

Now, that we`ve learned this important piece of the story, thanks to whoever leaked it to "The Washington Post", I think it`s important to take a step back and look at the broader context here, and the timeline that we know of in terms of how this whole meeting played out. We know that e-mail promising dirt on Hillary Clinton was sent to Donald Trump Jr. on June 3rd, 2016. We know that Donald Trump Jr. responded shortly thereafter, quote, if it`s what you say, I love it.

We know that four days later, June 7th, a sit-down meeting was put on the calendars of Manafort, Kushner and Trump Jr. We know that that night, Donald Trump Sr. promised a, quote, major speech about, quote, all of the things that have taken place with the Clintons, unquote. Now, that was two days before the meeting took place on June 9th, 2016.

We know per NBC News reporting that Donald Trump was at Trump Tower on the day of the Russian lawyer meeting, though he claims he was not part of it and initially claimed he knew nothing about it. We know that members of the Trump campaign who went to that meeting say they got no information and it was a waste of time. And we know that the president never did give that speech about, quote, all of the things that have taken place with the Clintons.

We know all of that coming into this week in terms of the White House response to the news of the meeting emerging this month. We know now that on July 8th, in response to an upcoming "New York Times" report revealing the meeting, Donald Trump dictated that statement describing the meeting in a much more anodyne way than was depicted in Donald Trump Jr.`s statement, and emphasizing the meeting was primarily about Russian adoptions.

We know that day before Trump dictated that statement, during the G20, he had a private side meeting with Russian President Vladimir Putin, reportedly an hour long conversation at which no notes were taken. A meeting which the White House didn`t even initially admit happened, not for at least for ten days.

Trump later told "The New York Times" that the thing Putin wanted to talk about at that private meeting was adoptions of Russian children in the U.S. He just volunteered this information to "The New York Times" as a complete non sequitur about his talk with Putin, saying, quote, It was not a long conversation, but it was, you know, could be 15 minutes, just talked about things. Actually, it was interesting. We talked about adoption.

Reporter Maggie Haberman then responds, you did? Trump then goes on to say, quote, we talked about Russian adoption. Yes, I always I found that interesting because, you know, he ended that years ago and I actually talked about Russian adoption with him which was interesting because it was part of the conversation that Don, referring to his son, had in that meeting.

The next day, according to this report in "The Washington Post," Donald Trump concocts the misleading statement, saying that the meeting his son took last year was primarily about Russian adoptions. To borrow the president`s words, you might call that coincidence, interesting, or you might call it a red flag.

Now, I should say that the White House is actively pushing back on this reporting. White House Press Secretary Sarah Huckabee Sanders was at the podium today saying that the president did not dictate the Don Jr. statement but rather that he weighed in on it like any father would.

But this new reporting from "The Washington Post" raise once again the question about whether the president is in any legal jeopardy and specifically whether his repeated attempts to put up smokescreens in front of the narrative about possible Russia collusion by his campaign constitutes obstruction of justice.

Now, we do know that special counsel Robert Mueller is already looking at that question which goes back at least to Trump telling NBC`s Lester Holt on camera that he fired FBI director Jim Comey because of the Russia investigation. So, does this revealing your reporting to "The Washington Post" last night further that case given the timeline as we now understand it. That`s the question.

And joining us now is Joyce Vance, former U.S. attorney for Alabama.

So, thank you so much for being here, Ms. Vance.

And I`ll start just with that question. Could Donald Trump dictating this statement of the way that he wanted Donald Jr. to respond about this meeting, in and of itself constitute obstruction of justice?

JOYCE VANCE, FORMER U.S. ATTORNEY: Well, the way prosecutors build cases is by compiling all of the available information about a course of conduct and then making an assessment about whether they can prove from that evidence all of the elements that they need to establish a federal crime. So, it`s unlikely that one isolated fact in and of itself would be used to substantiate a charge, but the problem for the Trump administration is every additional piece of evidence that comes to light here is like adding more kindling to a fire that`s starting to burn.

REID: And here`s what I think would be the crux of the problem, right, is that you have Donald Trump on Air Force One, you know, conferring with aides, trying to dictate a statement, which means he did know about the meeting, when he said he didn`t know anything about it. And he constructs the statement before Donald Trump Jr. gives the statement, reveals it.

Does that mean that because he then later said he never knew anything about the meeting, that that lie in and of itself is that consciousness of guilt? Is that a march toward obstruction? If you`re a prosecutor, what do you make of that time line?

VANCE: Yes, those are all of the right questions. It`s a really interesting situation. What was it about this meeting that they wanted to conceal? Why didn`t they want the truth to come forward?

And why did the president apparently disregard the advice of Mr. Kushner`s lawyers who wanted to put out a truthful statement, something that couldn`t come back to bite them down the road. All of these questions are the way this investigation will proceed. And if we`re talking about obstruction of justice here, and it looks like we increasingly are, we`ll be looking to see whether or not there was a corrupt motive at play.

And so, these are all pieces of evidence that will tend to establish or not the existence of criminal conduct.

REID: And you mentioned the advice of advisers. We don`t know if it was attorneys, but we do know that according to the leaks of this conversation aboard Air Force One, someone in that gaggle said we should give a true statement and Donald Trump and others said no, let`s give this statement instead.

Does that fact in and of itself prove to be incriminating? Or tend to be incriminating?

VANCE: So, prosecutors -- for prosecutors, when you see folks engage in a cover-up, usually people that have nothing to add don`t engage in cover- ups, right? It`s like throwing down red meat to a group of prosecutors like the team that Mueller assembled. And this is the sort of information that really builds a trajectory for a team of prosecutors.

REID: Yes, and I asked this question last night and I`ll ask you as well. If you were Bob Mueller, would you then want and now immediately depose both Donald Trump Jr., Jared Kushner, Paul Manafort but also Donald Trump Sr., the president?

VANCE: I think it`s a little bit premature. Something I like to do in building cases, particularly cases of this nature, is that you want to have as much information as you can on hand. As a prosecutor, you want to know everything you can about a sequence of events, about potential criminal conduct before you get down to the point where you question key material witnesses, subjects, targets of the investigation. I think we`re still not there yet in this case.

REID: All right. Joyce Vance, former U.S. attorney for Alabama, really appreciate your time. Thank you.

VANCE: Thanks for having me.

REID: Thank you so much.

And joining us now, McKay Coppins, staff writer for "The Atlantic".

All right. McKay, thank you for being here.

And I want to take you back to that Trump Tower meeting because I think what the Trump campaign or the Trump White House has wanted the public to believe is that Donald Trump Jr. proactively takes the meeting by himself. That Jared Kushner and Paul Manafort barely know why they`re there. And this is really on Donald Trump Jr.

Does Donald Trump Sr. now dictating the statement that his son is going to give destroy that narrative? And if so, is the White House worried they have now destroyed their own narrative and incriminated potentially the son and the father?

MCKAY COPPINS, STAFF WRITER, THE ATLANTIC: Well, the question of incrimination is an interesting one. I thought what the U.S. attorney you had on just now had to say was interesting. I think that you`re absolutely right that this damages the narrative that the White House has been putting out. I mean, the whole idea behind this was that this was kind of an innocent, innocent misguided thing that happened, kind of a comedy of errors, right, that Donald Trump Jr. kind of had this meeting, that it went awry, people wanted to get out as quickly as possible. That the president had nothing to do with it, didn`t even know about it.

Him -- this news that he was dictating a statement doesn`t necessarily mean that he did know about the meeting back when it was happening. What it does mean is that he was actively engaged in trying to mislead the public as to what that meeting was about and what was happening in that meeting. And that matters because the whole idea that the president is kind of a bystander in all of this doesn`t hold up under scrutiny when we have news like this coming out.

REID: And, by the way, McKay, you`ve done a lot of reporting on Donald Trump, the person, right? And one of the things that comes through when you read biographers of his, when you read your pieces is that Donald Trump is never a bystander. He`s a micromanager.

COPPINS: That`s right.

REID: To believe even Sarah Huckabee Sanders and he weighed in on what Donald Trump Jr. would say, that is micromanagement. Given that, does it seem credible to you that Donald Trump would be in Trump Tower when his son, his campaign manager and his son-in-law go take a meeting that is specifically about the thing he wants to do, damaging information about Hillary Clinton which is what the subject of his speech is supposed to be, that he would then be told nothing about it? Did he ever give Donald Jr. that much autonomy to do anything?

COPPINS: Look, I will say that is not credible at all to me, the idea that this was somehow kept from Donald Trump. Now, what I will say is he is a micromanager when it comes to things he`s interested in. He can be detached at other times when it`s things that he`s not interested in, for example, health care policy.

But when it comes to digging up dirt on Hillary Clinton, which was one of the most animating things that was happening in his campaign for month upon month, he clearly would have known about it at least as far as I`m concerned. And also, you know, one of the things that he does is the way he runs his team, the way he runs his campaign organization is that he empowers his aides to kind of eat what you kill, to go after various opportunities and then come back and brag to him.

And it`s not credible to me that nobody in that meeting or nobody on that e-mail chain wouldn`t have come back to Trump and said, hey, look, we have this awesome lead from the Russians. They have -- they`re promising dirt on Hillary Clinton. That`s not credible to me.

The other thing I would say about this whole episode that I think is illustrated here is that Donald Trump overruled Kushner`s lawyers here by dictating a misleading statement, if the reporting is to be believed. If that reporting is to be believed, it`s just another illustration of how impossible it is for anyone in Trump`s orbit, lawyers, aides, a new chief of staff, whoever else to rein in kind of the chaos of this White House because Donald Trump is going to do what he wants to do.

And when I talk to Republicans in Trump`s orbit, what they`re telling me is that he doesn`t view this whole Russia issue, the whole issue of potential collusion and cover-up as a legal problem. He views it as a political problem, one that can be combated or fixed by firing off tweets or dictating statements or changing perceptions.

He doesn`t grasp the idea that there is a special prosecutor with a big team, you know, kind of combing through every crack and crevasse of his administration and former campaign looking for a crime.

REID: Yes. You could say that no man is in so much peril as one can who cannot see any danger. But we shall see what happens.

McKay Coppins, staff writer for "The Atlantic" -- thank you so much. Really appreciate you.

COPPINS: Thanks, Joy.

REID: All right. Major breaking news tonight. We are just learning about a radical new policy change the Trump administration is reportedly about to undertake. The reporter who broke that story joins us next.

(COMMERCIAL BREAK)

REID: OK. I want to bring you some really big news that we got just as we were going to air tonight. So much of the news from this White House has to do with differing aspects of the Trump/Russia investigation and the questions about what happened in the 2016 election. And also the generalized chaos that`s marked this president`s first six months in office.

But while all of that plays out, the administration is also going about the business of implementing policy. And tonight, we`re getting the first glimpse of something truly radical that this administration is preparing to do. "The New York Times" reports that the Justice Department plans to take on affirmative action in college admissions. Quote, the Trump administration is preparing to redirect resources of the Justice Department`s civil rights division toward investigating and suing universities over affirmative actions admissions policies deemed to discriminate against white applicants, according to a document obtained by "The New York Times."

The document, an internal announcement to the Civil Rights Division, seeks current lawyers interested in working for a new project on investigations and possible litigation related to intentional race-based discrimination in college and university admissions.

What "The New York Times" is describing a Justice Department that is operating in a way that is radically different under Attorney General Jeff Sessions. The initiative to uproot affirmative action appears to be coming from not the career staff at the Justice Department but from the political appointees. That raises questions about whether the career staff in the civil rights division will begin leaving the Justice Department rather than staying on and carrying out a mission that`s gone upside down from what it used to be.

Now, already, the Justice Department has changed sides on key issues, like the Texas voter ID law, going from challenging the law under President Obama to dropping the matter. Under Obama, the Justice Department moved aggressively in support of gay rights. Now, the Justice Department argues that civil rights law does not protect gay people at all.

And tonight, we have this new reporting that the Justice Department intends to use resources from the Civil Rights Division to go against affirmative action. And check out the timeline here. The memo calls for lawyers who would like to be involved in the anti-affirmative action project to submit their resumes by August 9th.

Joining us now is Charlie Savage, "The New York Times" reporter who broke this story tonight.

Mr. Savage, thanks for your time.

This directive that`s coming out to switch sides on affirmative action, it talks about going after universities. In your reporting, are there specific universities in mind or are they talking about actually suing colleges and universities over their policies?

CHARLIE SAVAGE, REPORTER, THE NEW YORK TIMES: They`re definitely talking about suing colleges and universities, but they`re also talking about first investigating them. Of course, that could also have a great chilling effect as the universities don`t want the weight of the Justice Department brought against them. I don`t think they`ve gotten far enough to identify specific initial targets.

What they`re trying to do now is staff up for this new project. They`re looking for people who are already working for the Justice Department`s civil rights division who would like to go after universities and colleges based on race-based admission policies, affirmative action, but they haven`t picked those people yet.

And one of the interesting things about this is this is a project that is going to be run out of the front office of the Civil Rights Division. That`s where the political appointees, the people selected by President Trump and Attorney General Sessions work, and that`s even though the civil rights division has an entire section that`s devoted to enforcing anti- discrimination laws in schools and universities, but they`re bypassing that. That section is full of career people, civil servants who have been spending years working on enforcing these laws and they apparently don`t trust those people or those people don`t want to have anything to do with it. So, this is going to be a side project run out of the political appointees shop.

REID: And did you get a sense of who is initiating this? Is this coming out of Jeff Sessions? Is this something that we`re getting from the Miller/Bannon wing in the White House? Do we have a sense of where this initiative is coming from?

SAVAGE: I would be lying if I said I knew who came up with the idea. The Civil Rights Division has had one acting head until last week, Thomas Wheeler, who was the general counsel to Vice President Pence when we was the governor of Indiana. He just left that position and a new acting head has taken over, another political appointee.

I should hasten to say, though, I think this is the kind of thing that one expects to see, especially in recent decades during Republican administrations. You know, we spent a lot of time sussing out the weird things that are happening that seem to be unique to Trump that wouldn`t happen if it was President Marco Rubio or President Jeb Bush or something like this. But the Civil Rights Division is sort of a hot potato that during Republican administrations in general has a dramatic pendulum swing. So, it may be that any Republican president would have presided over a Civil Rights Division that does some of the things that you talked about in your introduction.

Certainly, during the George W. Bush administration, the civil rights division was a major battleground for culture war clashes between career liberal staff who were interested in enforcing civil rights laws in a traditional manner and a political appointees whoa are coming in trying to take it in the opposite direction.

REID: Yes, and those of us who live in Florida remember that as Governor Jeb Bush who wanted to be president, ended affirmative action by decree, including in university admission. So, yes, you`re right, this is sort of a Republican thing.

Charlie Savage, "The New York Times" reporter who broke the story tonight, thank you so much. Appreciate your time.

SAVAGE: Thank you.

REID: Thank you.

And joining us now is Vanita Gupta and he was acting head of the Civil Rights Division in the Justice Department until January. She`s now the president of the Leadership Conference on Civil and Human Rights.

Vanita, thank you so much for making the time on short notice to come in.

And I just want to get first of all your reaction to this news that there is going to be this special project in the Civil Rights Division to potentially sue universities for what they consider to be discrimination against white applicants.

VANITA GUPTA, FORMER ACTING HEAD OF CIVIL RIGHTS DIVISION, DEPARTMENT OF JUSTICE (via telephone): Look, I think it`s part of a trend of seeing civil rights laws turned on their head and being used to advance an agenda that they certainly were not created for. And that is why you`re not seeing career lawyers -- you`re not seeing this project being housed in the educational opportunity section that day in and day out enforces our federal civil rights anti-discrimination laws.

That`s why this is a position that is in the political front office because it is part of a political agenda that has been, you know, quite active in this country for some time.

REID: Yes, and you -- "The New York Times" piece that came out tonight quotes at least one activist, an anti-affirmative action activist, saying this is, you know, something that`s welcome for those who oppose affirmative action and then it`s a long time coming.

Is there anything in civil rights law that allows the Justice Department to sue a university for having affirmative action policies to recruit people of color?

GUPTA: Well, look, the United States Supreme Court considers this issue periodically and last considered it in a University of Texas case that went up to the Supreme Court during the Obama administration. And in that case the Supreme Court held, upheld a very carefully crafted race conscious plan that the University of Texas was implementing. So, this is -- there is good law on these issues. But what Charlie said is exactly right, which is what that the Justice Department of schools and colleges that are engaged in trying to ensure diversity in their student body is going to be chilled by the notion that the Justice Department is investigating.

This happened during the Bush administration as well where Roger Clegg`s (ph) organization and other organizations that have long had an anti- diversity agenda have -- were sending letters to schools and threatening them with lawsuits, and it did have a chilling effect. And I think that`s something we should be very concerned about here. And having it come and having this position of course housed in the political front office, it may be that it`s multiple positions just shows that there is significant interest from the leadership offices and the Justice Department to make this part of a concerted effort.

REID: Yes. Vanita Gupta, former head of the Justice Department`s Civil Rights Division, thank you so much for making the time tonight. Appreciate it.

GUPTA: Thank you.

REID: Thank you.

Meanwhile, a FOX News contributor is out tonight with explosive allegations that the cable network concocted a story intended to deflect criticism aimed at Donald Trump. That story is next.

(COMMERCIAL BREAK)

REID: When we think a big juicy bombshell scoops, we don`t always think of our button down friends at National Public Radio. But today, the fine folks of NPR delivered a stunner. Their explosive story today detailing a lawsuit that alleges that FOX News deliberately concocted a false story about a man who was murdered last summer with the specific intent of helping clear Donald Trump of suspicion that his campaign colluded with Russia in the run-up to the 2016 election.

The story in question involved a 27-year-old DNC staffer named Seth Rich, who was murdered in July of last year in what police said appeared to be a botched robbery attempt. In May of this year, FOX News published an article online, alleging that it was Rich who had leaked all those internal DNC e-mails to WikiLeaks during the 2016 election, and not Russian government hackers.

The story quoted FOX News contributor and private investigator Rod Wheeler, saying his only investigation showed a link between the DNC staffer and WikiLeaks. A week later, FOX News retracted the story, saying it had found that it did not meet FOX News` standards.

And today in a lawsuit uncovered by NPR, Rod Wheeler, the FOX News contributor whose quotes supported that story alleges that those quotes were fabricated, that he never said he connected the DNC staffer to WikiLeaks. More than that, he alleges that FOX`s story was designed to shift the blame from Russia and help put to bed speculation that Donald Trump colluded with Russia.

Wheeler claims that he, along with Ed Butowsky, an unpaid FOX News contributor and Trump supporter, had a meeting with then Press Secretary Sean Spicer to inform him of the story that was then in progress.

The lawsuit even cites a text message from Butowsky telling Wheeler, quote, not to add any more pressure, but the president read the article. He wants the article out immediately. It`s now up to you, but don`t feel the pressure.

Sean Spicer admitted having met with the two men but denied that the president or the White House had anything to do with the story.

For his part, Butowsky told NPR he was joking when he told Wheeler the president had read the story. In a lawsuit, Wheeler says, even after he confronted the reporter who wrote the story about the fabricated quotes, she texted him saying, quote, re-read the story we sent you last night and stick to that script.

The suit also quotes an e-mail allegedly sent by Butowsky to several FOX News anchors the night before the story broke, coaching them on how to present it. Quote, one of the big conclusions we need to draw from this is that the Russians did not hack our computer systems and steal e-mail, and there was no collusion like Trump with the Russians.

Wheeler appeared today on my friend Ari Melber`s new show "THE BEAT" and talked about the bombshell allegations that he`s making in his lawsuit against FOX News.

(BEGIN VIDEO CLIP)

ARI MELBER, MSNBC HOST, THE BEAT: FOX News reporting you as the source --

ROD WHEELER, FOX NEWS CONTRIBUTOR: Right.

MELBER: -- linking the DNC staffer to this hacking.

WHEELER: Right, the reporter.

MELBER: You`re saying at the time that was false.

WHEELER: Right, the reporter from FOX News, Malia Zimmerman, she wrote that story. I immediately challenged her and I said, Malia, that`s just simply not true. You and I both know this isn`t true, and she said, well, her bosses told her to leave those quotes in there. And I said, why would you leave something in an article that you know is not true? And that`s why we`re here today.

(END VIDEO CLIP)

REID: Wheeler says because FOX News pinned a false story on him with those quotes he said were fabricated and attributed to him over his objections, his reputation has been essentially damaged.

FOX News for the report denies that the story was designed to detract from Russian collusion narrative and says the retracted Seth Rich story is being investigated, but that FOX has no evidence that Rod Wheeler was misquoted.

Joining us, David Folkenflik, NPR`s media correspondent.

David Folkenflik, what a great scoop. Congratulations on that, first of all.

DAVID FOLKENFLIK, NPR MEDIA CORRESPONDENT: Thank you.

REID: And let`s start with how Rod Wheeler wound up in the middle of this in the first place.

FOLKENFLIK: Well, it`s almost, not quite but almost a hermetically sealed FOX News universe. You`ve got Ed Butowsky who I think really is the pivot figure in all of this. He is an unpaid figure, appears frequently on FOX News, FOX Business, and as an annaloid (ph) supporter of the president particularly.

He decides in February he`s going to help out the Rich family. After all, the murder of Seth Rich that happened last July 2016 was never solved. He was fatally shot on the 10th of July last year.

He says, I`m going to help the family. He says, I`ve uncovered a piece of information. A friend brought it to me. Maybe the family should know this, tells the family.

And what`s more, you guys should have a private detective. They said, we can`t afford it. He said, why don`t -- I`m a wealthy financial guy outside Dallas. Why don`t I take care of that for you?

He presents them with Rod Wheeler. Suddenly, they have free of charge, an investigator.

What Wheeler says, what he presents in his lawsuit, what`s more is presented with an unusual degree of documentation in this lawsuit is that from the outset this was a vehicle, according to the lawsuit, according to Wheeler, for Butowsky to essentially exonerate the president, exonerate the Trump campaign to its ties of Russia, and say, these hacks of thousands and thousands of e-mails that were unleashed from the Democratic National Committee last year, they were done from an insider. They were done from Democrat. What`s more? There was a cover-up and that might be linked to the Democrats themselves.

There was no -- as far as we can tell, as far as we know, there was no basis to make that allegation in the story. But the story was the fruit of the seed that was planted by Ed Butowsky, if to believe the evidence and the material presented by Rod Wheeler`s lawsuit.

REID: And do you get from your reporting that Rod Wheeler understood when he took this job that his job was to not to solve Seth Rich`s murder, but to essentially frame him as the person who stole and leaked those DNC e- mails?

FOLKENFLIK: I think that Rod Wheeler decided to go along with this. He had to make a conscious decision in the beginning that he was comfortable with this FOX figure, this clear Trump supporter being the benefactor there.

REID: Yes.

FOLKENFLIK: I do think Rod Wheeler did not fully accept or appears from his public statements to have not been fully comfortable with the conclusions of metropolitan police that it was clearly a botched armed robbery --

REID: Right.

FOLKENFLIK: -- or that there was no, you know, or the assertions by Democrats and by the Rich family that there`s no links. On the other hand -- and you`ve seen that from some of the responses that the Rich family has had for some of the things that Rod Wheeler has said.

On the other hand, Rod Wheeler strongly feels and has material strongly supporting the idea that he did not want to be saying publicly a lot of these things that were cut against what he knew he couldn`t support.

REID: I want to play a little bit of Rod Wheeler when he was on Sean Hannity making the case about Seth Rich. Take a listen.

(BEGIN VIDEO CLIP)

SEAN HANNITY, FOX NEWS HOST: What did you discover in terms of the contacts with WikiLeaks?

WHEELER: Right. Well that`s an excellent question. Let me clear that up right now exactly what it was that I found. Now, I have never seen the e- mails myself directly. I haven`t even seen the computer that Seth Rich used.

(END VIDEO CLIP)

REID: It doesn`t sound like he was making a definitive case on the air. Did he indicate that he was deliberately walking himself back on the air or in that clip is he just going along with what Sean Hannity and what FOX News and what Mr. Butowsky wanted him to do?

FOLKENFLIK: No, I think he`s trying to stop very much short of what it is he was being pressured to do strongly by Ed Butowsky, who was saying that the president of the United States wanted him to say these things, and by Malia Zimmerman, the reporter for FOX News. And remember, this isn`t in the context. It`s in the suit but it`s also borne out by my reporting.

You know, Wheeler was a guy who was paid per appearance on FOX News. He didn`t have a set salary. He wasn`t on staff, per se. And he was very much trying to, over the course of this year, raise his profile there, make the case that he deserved a more prominent thing there. He`s got this tension. You`ve got to provide fox with what it wants, but at the same time he`s stopping short of this.

He went along a little further in the appearance he made on that night, May 16th of this year on the "Sean Hannity Show", Wheeler starts to offer body language and tonal emphasis in a way that suggests he`s very agitated about the possibilities. But if you look at what he says, he says, it might be consistent if you listen to what somebody in law enforcement has said that it is possible there was some link with -- it`s very far short of the declarative things assigned to him and put in his mouth.

One of the fascinating things, one of the things I found so powerful and was able to convey in the story I did this morning was if you listen to the audio tapes, which are part of the story that we did for the radio today --

REID: Sure.

FOLKENFLIK: -- you hear him pushing back in a three-way conversation with Malia Zimmerman, with Ed Butowsky, and saying, but I didn`t say that.

REID: Wow.

FOLKENFLIK: You know, this isn`t what I said. This isn`t what I now.

REID: Yes.

FOLKENFLIK: And she said, well, it`s true. It`s not what you said about the e-mails. She acknowledges, the reporter from FOX News, in her own words caught on tape -- it seems to me that Rod Wheeler spent a life documenting what he said and he did.

REID: Sure, absolutely.

FOLKENFLIK: Caught on tape, she`s acknowledging, it would seem, that she did put words in his mouth. Not a journalistic impulse or imperative.

REID: Wow, this is a huge story. David Folkenflik, a huge scoop. Everyone should read this on NPR`s Website. Thank you. We hope you`ll come back.

FOLKENFLIK: You bet.

REID: Thank you very much.

All right. Much more to come here tonight, including what many in Washington may be getting wrong about the new White House chief of staff.

(COMMERCIAL BREAK)

REID: At his confirmation hearing in January, Department of Homeland Security nominee John Kelly earned plaudits on both sides of the aisle when he promised to speak truth to power, and always give his honest assessment and recommendations. But it was at a hearing a month later that we got a truer sense of where his loyalties lay.

(BEGIN VIDEO CLIP)

REP. KATHLEEN RICE (D-NY), HOMELAND SECURITY COMMITTEE: Do you have concerns about political operatives trying to influence the work of the Department of Homeland Security?

JOHN KELLY, U.S. SECRETARY OF HOMELAND SECURITY: No. I work for one man. His name is Donald Trump obviously. He has told me, Kelly, secure the border. That`s what I`ll do. I`m mildly interested in what political people think about that mission.

RICE: Actually, you were chosen by him. You work for us. You work for the American people first and foremost. I`m sure that`s what you meant.

KELLY: We all work for the American people.

(END VIDEO CLIP)

REID: Now on his second full day on the job as White House chief of staff, John Kelly is basking in the accolades. He fired the Mooch. He`s been reaching out to top Democrats, like Chuck Schumer and Nancy Pelosi. He`s being wildly hailed as just the man to restrain the president`s impulses and get the White House back on track.

But much of the positive press coverage has ignored that fact that a president who prizes loyalty above all else has obviously put a true loyalist in that role. Indeed, much of the evidence to date indicates that Kelly has been a top Trump enabler, whether it`s jokingly suggesting that Trump cut down members of the press with a sword, or defending Jared Kushner`s attempts to create a secret backchannel with Russia, calling it a good thing, and saying I don`t see an issue here. To his consistent defense of the Muslim travel ban.

John Kelly has been in virtual lock step with Donald Trump on virtually every major issue, especially on immigration, often in typical Trumpian fashion, including telling lawmakers if they don`t like the immigration laws, they should change the laws or, quote, shut up.

Under John Kelly taking business at DHS has meant immigration arrests are up by 40 percent under his tenure. And DHS being one of the branches of government that have been willing and able to execute Trump`s policy principles.

As Brian Beutler pointed out in "The New Republic", now that he`s in the Oval Office, the only questions that matter are whether Kelly can prevent Trump from moving against special counsel Robert Mueller and whether he`ll resign if he can`t.

And joining us now is Brian Beutler, senior editor at "The New Republic".

All right. Brian, thank you so much for being here.

Have you been able to determine whether or not John Kelly, General Kelly, who has been a loyalist up to now, has any intention whatsoever of reining Trump in?

BRIAN BEUTLER, SENIOR EDITOR, THE NEW REPUBLIC: I mean , I think it`s clear 24 hours in that`s fixed everything, that there`s nothing wrong at the Trump White House anymore, that all of the problems there are solved.

I think the issue is this, that even if you set aside everything that you said in your lead-up which creates a pretty damning portrait of Kelly as more of a loyalist than a truth teller, is that if John Kelly could be the most effective chief of staff in White House history, more effective than Leon Panetta or than James Baker and could create, you know -- he could lock down the Oval Office so people weren`t coming in and out getting the president`s ear, if he could fire Jared Kushner and Ivanka Trump so there wasn`t family interference in what the president was trying to do or thinking he should do, is that at the end of the night, Trump goes up to the residence, he gets on the phone with all his friends, wakes up in the morning, turns on FOX News.

He communes with the host of FOX News in a way where they`re almost like advisors to him across the airwaves, and he can just upend decisions that John Kelly made in concert with the president on a lark because he doesn`t have the discipline to be managed by any chief of staff.

REID: Yes, and he doesn`t listen to any of the generals. McMaster hasn`t had an easy time getting him to listen either. There`s an interesting piece in your -- interesting part of your piece where you talk about this leak, potentially from allies of General Kelly or maybe from allies of Jim Comey, about Kelly calling Jim Comey after he was fired and offering him support.

This is what you write in your piece. If Kelly or his allies orchestrated this leak, it would suggest a serious determination on his part to use his power to protect the Russia investigation. If Comey or his allies were the prime movers, the motivation was apparently to force Kelly to live up to the standard that he at least pretended to hold when he called Comey to vent two and a half months ago.

Since this piece went live, do you have a greater sense of which of those two things is more true?

BEUTLER: I don`t. I wish I did. I think the effect is similar, whether the leaks stem from the Comey camp or the Kelly camp is that it limits John Kelly`s options insofar as Donald Trump tries to make a move first on Jeff Sessions and then ultimately on Robert Mueller. I think that`s the one place where John Kelly really can -- you know, if we`re going to have to lower the bar for everybody in the Trump White House, you can`t lower it to he fired Anthony Scaramucci, the sort of clownish mid level figure. It`s, is he going to -- is he going to intercede if Trump tries to break the rule of law by quashing the Mueller investigation?

And there are ways he can do that. He can use his influence over personnel matters to prevent the firing of Jeff Sessions or to make sure that Sessions is replaced by somebody who maintains the integrity of the Mueller investigation. Or he could resign if Trump ultimately does move on Mueller in some way.

And the leak that went to CNN right around the time that Scaramucci was fired sort of suggested that in his heart of hearts, he at least wanted Comey to think, that he didn`t think the firing was appropriate. He thought there was a danger there. And that, you know, his own sense of personal integrity had him thinking about resigning.

Well, if that`s the case, it goes ten times and much if Trump moves on Robert Mueller. And we`ll find out I think if Trump`s actions towards Sessions and Mueller continue as they have been, that most likely that was not something that John Kelly put out there to try to close down Trump`s avenues of approach towards Mueller and it was an outside leak to try to control John Kelly himself.

REID: Yes. Well, we shall see. Brian Beutler, senior editor at "The New Republic", thank you so much. I really appreciate your time.

BEUTLER: Thanks, Joy.

REID: All right. A lot more to come on what has turned out to be a very busy news night. Stay with us.

(COMMERCIAL BREAK)

REID: Republican leaders in the Senate are now saying they are ready to move on from trying to repeal Obamacare, at least for the time being. In the first days after the stunning defeat for Republicans they have talked about trying again, possibly even before the August recess. But they do not have a bill that could pass with Republican votes alone. And so, now, the Senate will try something else.

Today, the Republican and Democratic leaders of the Senate health committee announced a new approach. Senators Lamar Alexander and Patty Murray say they will hold bipartisan hearings on health reform starting the first week in September. Alexander and Murray are hoping to work fast. The contract for insurance providers come up at the end of the month and senators want to have a bipartisan proposal if in place before that.

Meanwhile, outside the Capitol, the pressure from activists has continued.

And joining us now is one of the activists, Karine Jean-Pierre, senior adviser and national spokesperson for moveon.org.

All right. Karine, thank you for being here.

KARINE JEAN-PIERRE, NATIONAL SPOKESPERSON, MOVEON.ORG: Hey, Joy.

REID: Hey. So, we know that, you know, some of the senators -- the senators who voted no have gotten a lot of love for it. Lisa Murkowski is greeted by cheers as she`s been going around Alaska and you`ve had people sort of cheering her and lauding her. And, of course, Susan Collins stepping off a plane in Bangor, Maine, and was greeted with applause, rounds of applause in the airport for voting no.

So, you`re seeing there, the pictures for Murkowski. And then there were go, there is Susan Collins getting love in the airport.

Is Move On and other organizations using that positive affirmation those senators got as a way to cajole other senators to vote that way next time if they try to repeal?

JEAN-PIERRE: Yes, I think so. Absolutely. I mean, look, the 20 million Americans who are about to lose their health care last week were certainly the winners in all of this, and the resistance, and the American people who stood up and rejected Trumpcare and what Republican senators were trying to do.

But honestly, Joy, we have to -- we have to stay vigilant because I don`t think that Republicans are going to stop their crusade of trying to take away health care and also take away Obama`s legacy. So, we have to -- we have to continue to fight. Recess is gong to be out. I think we will see the same energy we saw on the February and April recess in the August recess and we just cannot -- we cannot give in or stop, because it`s not in the rearview mirror, I don`t believe.

REID: And we know that the resistance has been very much, you know, stick together Democrats, oppose everything Republicans do. Will liberals, progressives punish any Democrats who actually work with Republicans on a bipartisan fix to Obamacare?

JEAN-PIERRE: So, I think this is -- I think this is the way it looks. Look, I think that -- I`ve heard about these bipartisan type of committees coming together, people coming together. The reality is, our kids have more power in Congress than they do. And until the leadership, until the leadership on both the House and the Senate come together and say look, we are not -- we are taking full repeal off the table, it is just not going to happen because the hard liners of both the House and Senate have been really clear. They want full repeal.

So I`m not sure that is actually going to happen unless, like I said, Republican leadership really decides that this is not -- this is that we need a bipartisan action here.

REID: But do you think some of what the resistance should be towards them or bucking them up or saying to leadership, you better support fix this bill otherwise, or else?

JEAN-PIERRE: So, I think what we are trying to do is make sure they don`t take away health care. If there are fixes absolutely that needs to be done to Obamacare. So, that is something that we understand. And we want to make sure that happens.

But taking away health care from people is not the way. To be honest, I think the policy we should be going for is Medicare for all. That is a popular policy that Americans actually want and it is solving many problems we have right now.

REID: All right. We will see if Democrats want to take that big of a leap. You`re talking about the Democratic Party here. We shall see.

JEAN-PIERRE: That`s right.

REID: Karine Jean-Pierre, senior adviser and national spokesperson for moveon.org, thank you very much.

JEAN-PIERRE: Thanks, Joy.

REID: Appreciate it.

All right. Every so often you can see the news coming at you from a long way off. We have a heads-up on a story like that just ahead.

(COMMERCIAL BREAK)

REID: We noted tonight that NPR is not the usual source for rollicking news from inside the White House, but it was today. Well, here is another surprise example. "Golf" magazine, take a bow.

Golf.com reported today about the president and his many trips to golf clubs in New Jersey, including this. Quote: Chatting with some members before a round of golf, the president explained his frequent appearances at Bedminster that the White House is a real dump.

The White House is already trying to get in front of this one telling "Golf" magazine that no such thing never happened, leading one to imagine what would have happened if Barack Obama had ever said such a thing about the White House.

Well, that does it for us tonight. We`ll see you again tomorrow.

And now, it is time for "THE LAST WORD WITH LAWRENCE O`DONNELL."

Good evening, Lawrence.

END

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