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Manafort Trial Day 1. TRANSCRIPT: 07/31/2018. The Rachel Maddow Show

Guests: Kara Swisher

Show: THE RACHEL MADDOW SHOW Date: July 31, 2018 Guest: Kara Swisher


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

I`m more distraught than you are. We`ll get through this together. We have a ton of news to get to.

For starters, they don`t call it the Rocket Docket for nothing. Today, Trump campaign chairman Paul Manafort went on trial in a federal courtroom in Alexandria, Virginia. And that court lived up to its reputation for moving cases through it lightning speed.

They polished off jury selection before lunchtime, six men and six women. Plus four alternates. The prosecution and the defense both gave opening statements this afternoon and the government even put its first witness on the stand before the day was out. This is the very first trial for the special counsel`s office.

The case the prosecution laid out in its opening statement goes like this: Paul Manafort earned millions and millions of dollars through his political consulting work in Ukraine. He then kept that money in secret overseas bank accounts and never paid taxes on it, even as he used that money to finance a lavish lifestyle, including items like a $21,000 watch and a $15,000 coat made from an ostrich. Yep.

Then when his Ukraine work dried up and he started having cash flow problems, he defrauded American banks into loaning him more money. Manafort`s lawyers rolled out a defense. We heard it for the first type today. It was all Rick Gates` fault. Rick Gates was Manafort`s long-time business partner who at one time was indicted alongside Manafort. But then he decided to cut a deal and cooperate with prosecutors, which means he`s now the government`s star witness.

But Manafort`s defense lawyers today told jurors that Rick Gates was responsible for any tax and bank fraud and that Gates was the one who embezzled millions from Manafort. Paul Manafort was simply guilty of trusting Gates too much. That`s what his lawyers say.

This is a big momentous day. Following this not only is it our first chance to see prosecutors from the special counsel`s office argue a case in front of a jury, what they are arguing is that the chairman of the president`s campaign is guilty on 18 felony charges.

Donald Trump and his administration have repeatedly tried to distance themselves from Manafort pretty much since they took office.


SEAN SPICER, FORMER WHITE HOUSE PRESS SECRETARY: Then obviously there`s been discussion of Paul Manafort who played a very limited role for a very limited amount of time.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I know Mr. Manafort. I haven`t spoken to him in a long time, but I know him. He was with the campaign, as you know, for a very short period of time, relatively short period of time.


WALLACE: They all but call him the coffee boy. Paul who? So, the president and his supporters argue that Paul Manafort and these charges against him have nothing to do with the president, and while it is true that this trial that will got underway today is not about Manafort`s time on the Trump campaign, prosecutors are going out of their way to keep Trump out of the trial.

ABC News reports that prosecutors have been coaching their witnesses not to mention Trump`s name or even that Manafort lives in Trump Tower. The judge in the case has warned that bringing up Manafort`s ties to Trump could unduly influence jurors.

There is at least one thing about this trial that is important to the relationship between Paul Manafort and Donald Trump. The first witness today was Tad Devine, chief strategist for Bernie Sanders` presidential campaign who worked with Manafort on political campaigns in Ukraine. The prosecution called him as their first witness to have him describe how much work Manafort was doing in Ukraine and how lucrative it was.

Now, just before we came on the air, we got an early rush version of the transcript from today`s hearing. I`m not going to be able to act out a whole conversation the way Rachel does, but here`s one little bit of the prosecutor`s opening statement that`s worth hearing.

This was the prosecutor today, quote: Up until 2014, Paul Manafort was flush with cash and hiding a lot of it from the IRS. But in 2014, the evidence will show President Viktor Yanukovych, Manafort`s golden goose in Ukraine, he lost power. The cash spigot suddenly closed and Manafort was on the hunt for a new source of money to fund his huge lifestyle.

The evidence will show that Manafort then applied for tens of millions of dollars in bank loans from a series of different banks. However, in order to obtain those loans he had to lie in violation of the bank`s rules and federal law.

That is what the prosecution intends to prove in this trial that Manafort was hard up for cash and desperate for income after his Ukraine work dried up. And that is important because that was when he went to one of Trump`s closest friends and said I really need to get to Trump, and then offered to work for Trump for free. How and why Paul Manafort became Trump`s campaign chair is still a weird so far unexplained thing and today in court, prosecutors began laying out the evidence for the dire financial straits Manafort was in when he joined up with Trump`s campaign for free. That`s something to keep an eye on as this trial moves forward.

Joining us is Josh Gerstein, senior political White House reporter, a close observer of the Manafort case since it began. He was in the courtroom today. And as of tonight, I`m lucky that I get to announce he`s an MSNBC contributor.

Josh, tanks for being here.


WALLACE: Take us through -- I`ve seen some of the early reporting that there were audible gasps. Take us through some of the more dramatic moments in the courtroom today.

GERSTEIN: Well, I mean, this reference to Rick Gates as having embezzled from Manafort was certainly something that grabbed my attention. One of the great mysteries of the case up to this point was going to be what was Manafort`s defense, how was he going to explain what seemed to be a very, very strong case on paper that he had made tens of millions of dollars, the government says $60 million on this Ukraine-related consulting and paid only a fraction of that inch income tax on the bank fraud charges. Similar paperwork that seems to be very incriminating.

And the defense seems to be to lay as much of that as possible at the feet of Rick Gates, his former deputy and partner who agreed to plead guilty to the related charges and turn state`s evidence. The question really is how likely are jurors to buy that given the large stack of paperwork here that doesn`t make Manafort look very good. And the real questions about why Gates would engineer this kind of offshore banking system that primarily benefited his boss.

WALLACE: Do you have any reporting that suggests that prosecutors were ready for laying in wait for the blame Rick Gates defense from Manafort?

GERSTEIN: Well, I mean, they had to know there would be an effort to dirty up Rick Gates to sort of throw him under the bus. I don`t know if they felt that Manafort would make this the focus of his defense and we`ll still have to see how that defense plays out.

But they obviously had to be ready and there was even a portion in the prosecutor`s opening statement which went before the opening statement from Manafort`s defense where they brought up Gates and they said look, it`s not really all about witnesses. There`s a lot of paper here. You`ll see it in Manafort`s own hand and his own e-mails.

The prosecutors said we have the burden of proof here and we`re happy to bear it, which I took to mean they think there`s ample proof that Manafort`s guilty.

WALLACE: Yes, arm chair lawyering is very dangerous but one thing that arm chair lawyers like myself heard when the indictments were first unsealed was that this was a paper case, that all the evidence was in the charging documents.

Was there a sense in the courtroom today that this was an airtight case or was there the anticipation that this could go anywhere?

GERSTEIN: I think a lot of observers still there it`s a pretty strong case with Gates` testimony. You really get not only the financial machinations surrounding those offshore bank accounts but these questions of bank fraud that arose in some part during the Trump campaign, these applications for large loans that went from I think the middle of 2016 through early 2017. Rick Gates allegedly had direct involvement in that the in doctoring some of the paperwork involved. So, he`ll be an important witness on at least some of the charges.

But most people I think watching believe the defense is trying to pitch to maybe get one or two kind of holdout jurors who will buy the fact that Rick Gates engineered this fraud and that somehow Manafort was just along for the wide, even though he was the one at the top of the food chain here, and he was the one really making the big bucks.

WALLACE: And he`s the one with the history of doing business in this part of the world.

Take us through jury selection. I read in your note or some other reporting that was the most animated you all saw Paul Manafort.

GERSTEIN: Yes, Manafort seemed subdued for a long time in a lot of these hearings both in D.C. and Virginia. He obviously ended up being jailed for the last month or month and a half or so which was something that his lawyers had tried to avoid. And that seemed to dampen his emotions somewhat.

But today, he was very involved during jury selection when they were trying to figure out which jurors to strike, which jurors to keep. He was flipping flu pads and notes at the defense table. He was chatting with several of his lawyers rather animatedly and even seemed to be making notes sort of maybe striking people out or having lengthy discussions with his counsel about which of these jurors might be most advantageous to him.

Ultimately, they ended up with six men and six women on this jury who will decide his fate at least in this first trial.

WALLACE: Can you -- I read this and I wonder this -- if I read this correctly. He was wearing a suit today.


WALLACE: We`ve seen other photos where he`s wearing a jumpsuit. The jurors will not be informed or see any images of him wearing that jumpsuit. Why would that be?

GERSTEIN: They typically would not. Usually the prison jumpsuits are only used for arraignments and sort of pretrial hearings. Whenever someone is potentially exposed to the jury, they`re usually brought in in street clothes, whether you`re talking about a white collar case or violent crime.

Usually, jurors are not told whether the defendant is in custody or is free on bail because it`s considered that that would be prejudicial. There`s that whole implication of guilt, especially in a violent crime case, if you see something being brought into the courtroom for example in shackles, a lot of jurors may think automatically this person is dangerous or presumptively guilty. So, juror -- courts and judges are usually pretty careful that those sorts of things taking off the handcuffs, that kind off stuff takes place outside the courtroom where the jurors can`t catch a glimpse of it.

WALLACE: But no ostrich coat, right?

GERSTEIN: No, it seemed like a pretty standard business suit. It`s probably more expensive than my suit. But I doubt it`s one of the $10,000 or $15,000 numbers that he was buying up in New York.

WALLACE: No one saw the ostrich.

Josh Gerstein, senior White House reporter for "Politico" and lucky for us, a brand-new MSNBC contributor. Thank you so much. We`re lucky to have you.

GERSTEIN: Thanks, Nicolle.

WALLACE: Joining us now is former U.S. attorney Joyce Vance.

Thank you for being with us, with me, Joyce.

Take me through what stuck out for you. I`m struck by some of what Josh was talking about, that the entire Manafort defense is blame that guy, my deputy. I mean, that doesn`t seem like a solid legal strategy to me.

JOYCE VANCE, FORMER U.S. ATTORNEY: Just from the evidence that we`ve seen publicly, it looks like the government has a very good case here. As you noted, it`s a paper case. That means the government will largely rely on paperwork, many pieces of paper that Manafort has either touched or signed to prove its case.

And they`ll jazz it up a little bit. They`ll have Rick Gates and perhaps others to narrate the case which the jury will undoubtedly find a little bit more interesting than just looking at paper. But still, with a case of that strength, you had to wonder why Manafort was holding out, why he wasn`t pleading guilty.

And so, I thought we might see a little bit of a twist today when we got a little bit of an intimation of what his defense would be during opening statements. But instead, we got the -- you know, my underling did it defense which is really in many ways something of a yawner, something that juries occasionally will show interest in and occasionally even a jury will hang over that, but it doesn`t seem like a strong defense here. I was surprised that we didn`t see a better opener.

WALLACE: Are you able to answer the question you just put before us, why is Manafort holding out?

VANCE: There are a couple of reasons, but frankly, you know, we all speculate, is there someone that Manafort fears more than he fears Mueller and spending the rest of his life in jail? That`s one possibility. Does he think that Trump will pardon him and make all of this go away? I suppose that`s a possibility.

And then there`s a third possibility which is that some defendants like to see how the evidence comes in at trial and bank on being able to cut a late deal with prosecutors if they believe the evidence isn`t coming in favorably to them?

So I wouldn`t say it`s impossible that we won`t see a late plea here, but Manafort doesn`t look like someone who is headed that direction.

WALLACE: And I understand that this trial is about bank fraud, it`s about tax fraud, it`s about things other than Paul Manafort`s time and tenure as chairman of the Trump campaign. But, clearly, this trial is on the president`s mind. This trial -- Cohen flirting with prosecutors in the Southern District, just based on the president`s new refrain on collusion, he pivoted today. Maybe it`s a coincidence it`s the same day the Manafort trial started, that no longer he`s saying that there was no collusion. Now, it`s collusion wasn`t a crime.

How does it fit into the broader puzzle about Russian influence over the Trump campaign?

VANCE: This case I think is the preamble to Russian collusion. This is setting the scene for Manafort`s past dealings and past crimes. Some of it may well leak into his time with Trump.

But it will clearly set the stage for I think a later section of this story, and we`ve seen Mueller stage other cases that way, first indicting Russians who were involved in social media manipulation, then indicting Russians who were involved in hacking. And in both of those cases, we see the possibility that there may be Americans who were involved.

Now, we`re learning a little bit more about Mueller`s history with Russian- backed dictator in Ukraine. And it seems that this too is headed in that same direction.

WALLACE: And could you take this case, I mean, would it be a building block if you`re trying to put together some broader picture or some broader conspiracy case? Because the information coming out of Michael Cohen`s camp is putting Donald Trump as someone who may have had knowledge of that Trump Tower meeting, Paul Manafort just happens to be one of the other people who are in that Trump Tower meeting.

There are a lot of connections and our colleague Jeremy Bash said I think in September of 2017 on this network that if you were looking for a Russian plant, if you were looking for agent to plant on the Trump campaign, Paul Manafort would be your guy.

VANCE: There`s really no such thing as coincidence in law enforcement. And it`s remarkable that we have Paul Manafort who is millions of dollars in debt to the Russian oligarch Oleg Deripaska, suddenly he shows up despite that debt and volunteers to work for free on the Trump campaign. And then during his tenure, he offers to brief Deripaska on what`s going on.

You know, this is a remarkable string of coincidences and I think Jeremy`s analysis from pretty far out will be accurate at the end of the day. So, we could see this case come together. Certainly, the special counsel team hopes that Manafort will become available to them as a witness. I`m sure that they would prefer to have him decide to cooperate with them.

But at the end of the day, even if he doesn`t cooperate, once this trial concludes, they will likely be able to compel his testimony and although it`s always better to have someone testifying as the result of cooperation as opposed to a compulsion order, Manafort can likely shed a lot of light on many of these issues.

WALLACE: Joyce Vance, former U.S. attorney from the Northern District of Alabama, we`re always grateful to have you, but especially on nights like tonight.

President Trump and his personal attorney Rudy Giuliani keep changing their minds what the president will be asked about should he sit down with special counsel Robert Mueller for an interview. Collusion confusion and some new news about what prosecutors are looking into tonight, that`s next.


WALLACE: As prosecutors promised, there was no focus on Russia in their opening statements today at Paul Manafort`s trial, but the specter of Manafort`s deep connections to Russia and to Kremlin-linked oligarchs hovered over today`s proceedings. Manafort was heavily in debt and owed millions of dollars to pro-Russian interests when he landed on the campaign. Once he became chairman of the campaign, Manafort offered private briefings, as Joyce just said, to one of those creditors, a Putin- friendly oligarch.

Mueller`s prosecutors in court filings have also described Manafort`s Ukrainian business partner as having active ties to Russian intelligence services. In fact, a memo written by Rod Rosenstein last summer and made public through court filings laid out Mueller`s authority to investigate whether Paul Manafort specifically committed a crime or crimes by colluding with Russian government officials. We also know Mueller`s team has questions for the president on this very subject.

Mueller wants to ask the president, what knowledge did you have of any outreach by your campaign including by Paul Manafort to Russia about potential assistance to the campaign? Last week began with the president`s lawyers saying they were willing to let the president answer questions on possible collusion but not on the issue of obstruction of justice.

But now with the president`s ex-lawyer, Michael Cohen, reportedly alleging the president knew about the Trump Tower meeting in advance, Democrats say the president may be on the hook for both.


SEN. RICHARD BLUMENTHAL (D), CONNECTICUT: There is credible evidence that the president of the United States has committed obstruction of justice and possibly a conspiracy to undermine our elections.


WALLACE: And the latest messaging from the president and his team of lawyers, there was no collusion and even if there was, collusion isn`t a crime. But in case anyone is wondering, they are now unwilling to answer questions on that topic either.


UNIDENTIFIED MALE: You said maybe you would let him answer a few limited questions on collusion but --

RUDY GIULIANI, ATTORNEY FOR PRESIDENT TRUMP: I don`t want to give them a false impression. Given some of the revelations of the last three or four weeks, we`ve been driven further away from the idea of answering any questions from them. We don`t think they have a legitimate investigation.


WALLACE: Joining us now is Chuck Rosenberg, former U.S. attorney and senior FBI official, and Jeremy Bash, former chief of staff at the CIA and the Department of Defense during the Obama administration.

Thank you both for being here tonight.

So, you have both banned the word collusion from any broadcast on which we all appear together. Talk about how the real sort of pot at the end of the ray bow for an investigation is a conspiracy.

Chuck, you first.

CHUCK ROSENBERG, FORMER U.S. ATTORNEY: Yes, sure. I guess collusion just irks me, Nicolle, because it`s not --

WALLACE: And you`re not easily irked.

ROSENBERG: I don`t tend to irk easily. But this is sort of a made-up thing. Collusion means agreeing with somebody else to do something. That`s what a conspiracy is. There`s synonyms, right?

So, the fact that collusion doesn`t appear in the criminal code as Mr. Giuliani asserts is utter nonsense because conspiracy does. And what the Mueller team is investigating is whether folks in the United States conspired with the Russians to interfere in our election. Call it what you want. When they finally charge it, it will be charged as conspiracy.

The notion that collusion isn`t a crime is a complete red herring. It`s to mislead people. It`s for the court of public opinion but it`s not for a court of law.

WALALCE: I just want to follow up with you, Chuck. When you said when had he finally charge it. Are you seeing enough pieces come to light in just what is public facing in this investigation that you believe there will be enough to charge someone with a conspiracy to coordinate or receive assist, from a hostile foreign power?

ROSENBERG: Yes, it`s an educated guess. I hope it`s a well-educated guess. I hope it`s a well-educated guess, Nicole. But yes, I am.

There are bits and pieces in the public record that suggests that it wasn`t just Russians. The timing of the president`s statements in Doral Florida, urging the Russians to go find the missing emails or hack into the DNC computers, all of that is tied to Russian activity that Mr. Mueller recently charged when he brought a case against the Russian intelligence officers.

So, I think there is enough. I think there are other calculations that are really important here like, for instance, whether Mr. Mueller believes he has the authority to charge a sitting president. There`s some debate on that point. The Department of Justice weighed in on it in the past and has opined that you cannot. So, there`s some unanswered questions but I think the pieces are there.

WALLACE: Jeremy Bash, I am a -- I have a well-attuned ear to everything Chuck Rosenberg says and I have never heard him say that before. So, I want to ask you the same question.

Do you see enough public facing evidence at this point to make another educated guess for us that there is enough evidence now to charge someone with conspiracy to coordinate with a hostile foreign power?

JEREMY BASH, FORMER CIA CHIEF OF STAFF: Well, I don`t think we know all the facts yet. And I think the Mueller investigation has a ways to go to eliminate those facts. But if you want to understand the way Bob Mueller thinks about conspiracy, all you have to do is take your dog eared and underlined copy of the July 13th indictment of 12 Russian intelligence officers on 11 counts because in there, Bob Mueller and his team lay out with specificity exactly what conspiracy looks like.

And if people want to research and use the Google machine at home to research it, it`s 18 USC 371. It`s conspiracy to defraud the United States.

And a couple of interesting things about that statute. First of all, it states that if two or more people agree to do something to commit an offense against the United States, and one of those people actually goes ahead and does it, then both people are guilty of conspiracy and shall not be imprisoned more than five years. It`s a class E felony.

And so, the important part is that if there were people inside Trump Tower, at the Trump Tower meeting, or inside the Trump campaign, or even Donald Trump himself who knew what at Russian government officers were doing and if the Russian government officers went off and did it, even if they didn`t come back and report it back to the Trump campaign, the Trump campaign knew about it, in effect, mere knowledge establishes a conspiracy.

And there are other places in the Mueller indictment, if you look at paragraph 21D in here it, it talks about how one of the GRU officers create a spear phishing e-mail attack. Well, it`s clear all the other 11 defendants didn`t know or participate in that, yet they were all under the indictment terms conspirators and potentially guilty of the alleged offenses.

And so, I think you have to understand the way Bob Mueller and the special counsel`s office is approaching the crime of conspiracy in order to analyze whether you think there will be a charge at the end of the day.

WALLACE: OK, I love when both of you take me to law school. Jeremy, I`m going to go from law school to spy novels, because you heard you say to our friend earlier today Preet Bharara, that there`s a 96 percent chance the reason Donald Trump has taken a pro-Putin position is because of money, because of long-standing financial ties between the Trump Organization and people around the Russian government. I want to ask you about that and something else you said. You talked about one-on-one meetings. You talked about Donald Trump clearing the room, which is what we understand him to have done with Putin.

We looked up one of the other people and you made this reference too, he cleared the room when he asked Jim Comey to see to it, to let the investigation into Mike Flynn go. How do those two hang together in your mind in terms of what a prosecutor or an investigator would be looking at right now?

BASH: When does Donald Trump actually want to have a private conversation? When does he want --

WALLACE: When he`s doing something sketchy.

BASH: Right. When he wants to do something where he doesn`t want other people to hear what he`s doing. And I think one of the concerns that I have and many national security professionals have about the one-on-one with Putin and, by the way, we still don`t even know if the translators were in there for the entire time or if the American translator was in there for the entire time.

One of the problems with that is that there is no record of what was said and I think even to this day the director of national intelligence spoke publicly about this and even Secretary Pompeo was questioned about this. They have not received a full debrief of what was discussed. It does harken back in my mind to other time when Donald Trump cleared the Oval Office so he could arm around Jim Comey to ask him to intervene in the Flynn case and drop charges, which is clearly something that Bob Mueller is looking at in terms of obstruction of justice.

WALLACE: Chuck, I want your thoughts on that. But also, if I give you a two-part question here and if you could sort of weigh in on the news tonight that Bob Mueller has sent more cases to the Southern District of New York. But first on Jeremy`s point about closed door meetings and Donald Trump`s appetite for them.

ROSENBERG: Right. So I think Jeremy`s spot on. The reason you throw everybody out, the reason you want something, you know, quote/unquote, off the record is you`re going to do something underhanded. And it seems like a number of these conversations are underhanded.

I want to echo one thing Jeremy said. He did a nice job explaining the law of conspiracy. He did that well.

One thing I would add, it doesn`t require that you succeed, right? You and I could agree to rob a bank, Nicolle. We could get Jeremy to be part of this. He goes out and buys a getaway car.

And then we get stopped on the way to the bank. We`re still guilty. All three of us of conspire to rob that bank.

So when I said earlier I think there is enough public information in the record to see a conspiracy it, I don`t necessarily mean that they succeeded. Or that everybody knew every part of the conspiracy. Again, that`s not required.

What`s required is that folks agreed to do something that the law forbids and that somebody took a step in that direction. So, to me, it seems to be coming together to me.

WALLACE: And on the question of Robert Mueller tonight referring more cases to the southern district, these were more lobbyists doing pro-Russian business in the Ukraine and other places?

ROSENBERG: Right. So it`s sensible. It`s not at the core of his mandate. It`s not at the core of the directive to him that he looked at Russian interference in the election but again, you have a binary choice when you`re a prosecutor or an investigator. And you come across criminal behavior.

I faced this had myself in my time as a prosecutor. You either do something with it or you do nothing with it. And it`s very hard for a prosecutor to do nothing when they come across evidence of a crime. So, it makes perfect sense to me that these other folks are going to get farmed out to U.S. attorneys` offices around the country and face the consequence of their actions.

WALLACE: Right. Chuck Rosenberg, former U.S. attorney and senior FBI official, and Jeremy Bash, former chief of staff at the CIA and the Department of Defense, taking me on a bank robbery, taking me to law school, I`m grateful to you both. Thanks for being here.

Coming up, President Trump`s new best friend is reportedly still working on missiles that could reach all the way to the U.S. More about that with one of my best friends, Steve Schmidt. That`s after the break.



REPORTER: Do you believe that them continuing to build ICBMs would violate the joint declaration from Singapore?

HEATHER NAUERT, STATE DEPARTMENT SPOKESPERSON: Yes, what we`re going on is the commitment that Chairman Kim made to our president. And that is the commitment to denuclearize. That`s something that we certainly anticipate that he will hold up his end of the bargain and his commitment on that.

In terms of that specific report, I`ve seen it. We`re all very well aware of that report. That would fall under an intelligence matter, which is something I`m not going to be able to get into.


WALLACE: Really? You think he`s going to hold up his end of the bargain.

That was State Department spokeswoman Heather Nauert punting on a question about a "Washington Post" report which NBC News has now confirmed that satellite photos and U.S. intelligence show that North Korea is continuing to produce ballistic missiles and work on their missile program even after the June summit in Singapore between Donald Trump and North Korea`s Kim Jong-un.

"The Washington Post" says work is under way on at least one intercontinental ballistic missile capable of reaching the United States. That news broke just hours after Donald Trump publicly courted the leader of another authoritarian regime, Iranian President Hassan Rouhani, who Donald Trump announced he would meet, quote, with no preconditions, a baffling offer from an American president who last week was hurling Twitter grenades at his Iranian counterpart, and an offer that Iran wasted no time turning down. Thanks but no thanks.

Joining us now is Steve Schmidt, Republican strategist and an old friend of mine from our days at the White House and on the campaign trail.

Steve, let`s just put this out there. You and I worked for someone who could see Russia from her house, so we`re in a good position to try to ascertain whether or not Donald Trump is operating from sort of ignorance is bliss or whether he seriously has a thing for these dictators. What`s your take?

STEVE SCHMIDT, FORMER GOP STRATEGIST: Well, Nicolle, let me just say, former Republican to begin, but look --

WALLACE: Non-practicing is what I like to say.



At the end of the day, Donald Trump made the world profoundly more dangerous with his reality show diplomacy in Singapore. Of course, Kim Jong-un is not honoring the spirit of the declaration or the agreement and they`re working on intercontinental ballistic missile which one day a nuclear -- a miniaturized nuclear warhead will sit on top of that could reach the continental United States.

And so, she`s up there spinning the American people. The intelligence agencies which are forwarding the information are under constant attack by this administration. So, roughly for 40 percent of the country, doesn`t matter what the intelligence agency says. What matters is what Trump says.

Now, thankfully, it`s a minority of the country but it doesn`t change that in actual reality, the country is more endangered because we had an unprepared, ignorant president go over there with the same level of rigor that he would plan an "Apprentice" episode with Meatloaf and Lil Jon.

WALLACE: But, Steve, how does the intelligence -- I mean, you pull the right thread through all three. The intelligence on North Korea didn`t ever point to what Donald Trump declared at the end of that summit that they`re no longer a threat. The intelligence community didn`t point to or support anything that Donald Trump said, and this is just what we know of what was public at the press conference in Helsinki, and the intelligence on Iran suggests that the deal that the president pulled us out of was better than anything he`s likely to get on his own.

So, how does the intelligence community served a client who is so either disdainful for dismissive or just willfully ignores the evidence-based and the fact-based intelligence on all three of these dangerous regimes?

SCHMIDT: Well, they can try to serve him and serve him they do. But at the end of the day, he`s the president of the United States. He believes what he believes and there`s more than enough news reports to suggest that he doesn`t want to hear anything that he doesn`t want to hear.

Of course, the Iranian deal had verifiable components to it. He pulled us out of that. He achieved a remarkable feat of putting the United States opposite the European Union, Russia and Iran with Iran having the high moral ground with regarded to fidelity to the agreement.

The agreement reached in Singapore with North Korea which he`s violating the spirit of was no verification protocols whatsoever. So, this is all nonsense. Again, it`s reality theater but with deadly, deadly consequences.

It was the strategic aim of the North Korean regime, one of the most evil and violent in the world, a slave regime, to elevate its leader to maximum standing on the world stage and they achieved that by standing next to the president of the United States. This has been the work of decades and Kim Jong-un knows his nuclear weapons guarantee him insurance from invasion by the United States.

And so, Donald Trump played all of his cards, pushed all the chips into the middle of the table, and he`s left with the pair of two. What he proved himself to be was inexperienced, naive, and ignorant and fool on the world stage. And, of course, that was noticed by every other adversary of these countries.

WALLACE: Steve, really quick, I want to ask you if you`re surprised that not a single national politically appointed national security official has resigned over what you just described, is obvious to everyone in this country and around the world in the American president.

SCHMIDT: I`m shocked by it, that there are so few men and women of principle, that there aren`t more Sally Yateses out there, that there aren`t more people who say enough, particularly when we see a president of the United States going behind closed doors with Vladimir Putin agreeing to who knows what, saying who knows what, making who knows what guarantees to Putin, what promises to Putin, what promises to turn another eye of Putin action in the Baltics or anywhere else in the globe.

He insults the Canadian prime minister. He attacks the British prime minister. He insults and attacks the chancellor of Germany. He questions and assault and degrades NATO: He questions the need for the European Union. He is an agent de facto of Russia`s foreign policy.

The foreign policies he`s advocating, the bipartisan consensus that existed pre-Trump between Republicans and Democrats would have recognized his foreign policy as clearly in the middle lane of the Kremlin`s strategic interest. And to see it being advanced by an American president is as disturbing as it is shocking.

WALLACE: Steve, your reward for ticking off Vladimir Putin`s entire honeydew list for Donald Trump is that we`re going to ask you to stick around for one more minute. There`s a real head scratcher of a theory being floated about the midterms. Ninety-eight days from now, is it possible that Donald Trump actually wants the Republicans to lose, that he wants Democrats to take over the House?

Steve, I`m looking at you for the answer. That`s next.


WALLACE: These days what`s up is down, what`s down is up. It`s all one big twilight zone episode. So, sure, why not? How about this theory?

"The Wall Street Journal" editorial board floating this idea that Trump actually wants, he wants to lose the House in November if for no other reason he`s itching to go up against Nancy Pelosi who would become speaker of the House again. The thinking being that with Nancy Pelosi as his political foil, Trump can fire his base right into a second term. For a president who plays more whack-a-mole than 3D chess, color me skeptical.

But a second term is clearly top of mind for the president who just wrapped up campaign style rally in Tampa, Florida to, support Republican gubernatorial hopeful Ron DeSantis, a rally that included reporters being heckled by the crowd and the president in trying to rationalize voter ID claiming that you need to show an ID to buy groceries. He obviously doesn`t shop. And for the record, you do not.

Back with us now is Steve Schmidt, Republican strategist and old friend from our days at the White House and on the campaign trail.

Are you buying this that the president actually wants the Republicans to lose? I can`t imagine anyone more docile and obedient than Devin Nunes over at the House Intel Committee.

SCHMIDT: Well, it`s going to turn out great for him just like how it turned out when he fired James Comey. He wanted that too, right?


SCHMIDT: You know, it`s been terrific for him.

Look, at the end of the day, I would think the last thing that Donald Trump wants is Chairman Adam Schiff with subpoena power. And that`s exactly what he`s going to have. I do think the Democrats will take the majority in the House of Representatives.

Now, the interesting aspect of it is this -- he may look out and see an 18- person Democratic field and pray that a socialist is nominated by the Democrats believing that you know, in his view, that if there`s two unelectable candidates, one of the two unelectable candidates is going to win. He had a razor thin margin of victory. He won by 78,000 votes across three states, losing the popular vote by 3 million people and his approval numbers at their highest are mired in the low 40s.

Now, if you look at the special election results and you`re a strategist working for the House Republicans, you`re saying, there`s no Republican safe in any district that is under plus 25 percent Trump. That means you could be in a 20 percent Trump district and lose in this midterm election.

Now, when the tsunami hits, and we consider its aftermath, what will be left of the Republican Party is not a chastened party not something that said, well, we were repudiated and blown out by Trump because the members who are left are going to be in districts that are plus 25 percent, plus 30 percent, plus 33 percent Trump. It will harden the resolve of the party and its faithful to Trump not away from him.

As the Republican Party is shrinking, as people like me are leaving, fervor for the leader is intensifying but the strategic problem is that it`s getting smaller. The smaller the party becomes, the more intense, the more extreme, the more devoted to its leader but it`s on a diminishing point of return on the curve.

And that`s Trump`s fundamental strategic problem heading into 2020 is that overwhelmingly, the vast majority of Americans don`t think he`s doing a good job, think he`s a bad president, think he`s compromised by a foreign power, think he`s dishonest which he is, of course, think he`s corrupt, which he is, of course, and thinks he`s lawless, which, of course he is.

WALLACE: Steve, lets me ask you, so his base wasn`t big enough for him to have drafted a victory speech on election night. So, Donald Trump didn`t think as much of his own base as some people make them out to be, that they`re this as you just said, he won by a razor thin margin.

How are Republicans marching off the cliff after him if his base wasn`t big enough to elect him in his own mind?

SCHMIDT: Because in the instinct for self-preservation that all politicians have and has run, you know, through the Republican Party since the rise of the Tea Party movement, what these members understand in a world where the politicians pick the voters because we no longer live in a country where voters pick the politicians, there`s susceptibility to a loss generally speaking is not in the general election. It`s in the primary.

So, faithfulness to Trump precludes a primary challenger from their right by a Trumpest candidate. And so, that`s the epidemic of cowardice we see, is that there`s no one literally willing to lay down a political career to stand up for principles that they cherished and held dear until I guess say 18 months ago. And since that time, everything that these Republican members as a general proposition once believed in, they no longer believe in or still believe in or just too scared to say it out loud for risk of offending Trump whose party it is lock, stock and barrel.

And Republicans have latched themselves to the mast and we`re going to see what happens in November. But the die is cast on this one for sure.

WALLACE: That`s former Republican still a strategist, Steve Schmidt. Thank you, my friend, for staying up with us.

Up next, other Russians at it again. Facebook is not naming names but somebody on the social network is acting a lot like the Russians did during the 2016 campaign. More on that story ahead.


WALLACE: Today, about 3,000 Facebook users got this alert in their inboxes, telling them an event they planned to attend or were interested in attending no longer exists. The event had been billed as a counterprotest to a white nationalist rally scheduled to take place in D.C. in two weeks. Now, Facebook says it has disabled that counterprotest event page because the group sponsoring the event is one of 32 pages or accounts that was involved in, quote, coordinated, inauthentic behavior that did not appear to push specific candidates but did promote activity around divisive social issues.

Facebook says it has been unable to identify who is behind these accounts. However, Facebook says it has found evidence that ties to the Internet Research Agency. That`s the Russian company that special counsel Robert Mueller says led online influence operations in the 2016 presidential election.

Now, Facebook has dumped 32 more accounts for engaging in behavior similar to what the Internet Research Agency did just three months before the midterm elections. But as NBC News reports late tonight, that`s only part of the story. NBC News reporting that in announcing the investigation into these 32 accounts, Facebook did not reveal the depth to which some of those Facebook accounts went in terms of stoking racial tension and inciting division.

Quote: NBC News was able to retrieve some of the pages Facebook deleted via a web archive search. A review of those deleted pages, quote, found efforts to target people based on liberal politics as well as Hispanic and African heritage. NBC News reports that, quote, Facebook deliberately did not reveal some of the most divisive content which was deleted.

Joining us now is Kara Swisher, executive editor of Recode.

Thanks for being with us, Kara.


WALLACE: You are the Facebook truther. What`s wrong with Facebook? I see their fancy ads. You know, the friends are back. The baby pictures are back. And no, no, the Russians are back.

SWISHER: The Russians are back. And the Russians never left and they didn`t catch the Russians the first time. And so, I mean, it`s nice that they`re telling us that they`re catching Russians now, but I want to know why they`re able to continue to thrive on this platform.

And so, I think the problem is fundamentally the platform. And while applaud Facebook for putting it out before the news reporters get it, I also do not applaud them for not doing something about it. And I think they`re trying and they`re trying all kinds of different techniques. But instead of just telling us about it, I think I would rather them do it and rid these things off the platform.

But again, they get kudos I guess for announcing it.

WALLACE: You know, I played that game as a political operative of putting news out before reporters get it. It`s usually because reporters are about to get it or someone in Congress. I mean, it`s usually pressure is bearing down on you.

But I guess my question about Facebook is, what`s wrong with the culture? One that this is still happening and two, they have to be backed against the wall before they reveal something that doesn`t sound like very many pages. I mean, it seems like if there are 32, maybe there are 32 more.

SWISHER: Oh, come on. There`s more and more. When this years -- when this happened maybe a year ago, I remember talking to a Facebook executive and saying, you know, if there`s one cockroach, there`s a lot of cockroach.


SWISHER: And you have to really understand it. This is a choice where the creation has gotten away from them. They don`t know the how to monitor it.

Listen, it`s really difficult, but they`ve made a fortune off of this company and in terms of eating up social media and eating up digital advertising revenue. So it really is critically important they figure out how to change their system so this doesn`t happen or that these tools are not used for nefarious ways even if there`s always bad people knocking at any media in history. This is unprecedented and it`s problematic I think.

WALLACE: We`ve talked before when they`ve been staring down the barrel at more regulation and perhaps being regulated like a media organization. Is there anything that would change their conduct? Is there anything that scares them?

SWISHER: I don`t know. I think -- what scares them, you know, I did an interview with Mark Zuckerberg.

WALLACE: I know.

SWISHER: That scares them is how do they keep innovating and changing in order to do something like this. But they don`t want to seem to let go of certain tenets that they have around free speech and other things. And I think the issue is free speech is not free of consequence, right? So, the question is, what are they going to pay for what they`re doing and how they`re thinking about it? And how are they going to deal with it as it moves forward because it`s only going to get more complex?

This is platform that is very easy to manipulate. And they`ve got to figure out a way to make it not easy to manipulate or they`re going to be regulated. And so, that`s I think their biggest problem, is that it`s not -- it`s not an easy solution but they`re well-paid and they`ve made a lot of money off of this and now they have to fix it.

WALLACE: You know, the human being who`s run this company. Do any of the human beings have any sort of guilty conscience about being a tool to carry out Vladimir Putin`s goals and meddling with our democracy?

SWISHER: I think so. I think a lot of people internally are. I mean, obviously, Mark showed a lot of remorse in that interview. At the same time, he said he wants it to be an open platform.

And, of course, he got into trouble because he didn`t defend Holocaust deniers, but he said they have a right to be on the platform too, and people who are wrong have a right to be on the platform. It`s an incredibly complex issue for someone who is not well-versed in the humanities, I guess. So, that`s the problem, is this is a human problem. And the people that are deciding these things who have enormous power don`t really know how to deal with it.

And that`s where -- there`s going to be a problem no matter what because of that.

WALLACE: Kara Swisher, executive editor of "Recode", I love seeing you and I appreciate your time tonight.

SWISHER: Thank you.

WALLACE: That does it for us tonight. I`ll look are for you tomorrow at 4:00 p.m. Eastern.


Good evening, Lawrence.



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