This is a rush transcript from "Fox News Sunday," July 26, 2019. This copy may not be in its final form and may be updated.

CHRIS WALLACE, ANCHOR: I'm Chris Wallace.

President Trump claims victory after Robert Mueller's testimony, as Democrats debate what to do next.

(BEGIN VIDEOTAPE)

DONALD TRUMP, PRESIDENT: The Democrats had nothing, and now, they have less than nothing.

REP. JERRY NADLER, D-N.Y.: Did you actually totally exonerate the president?

ROBERT MUELLER, FORMER SPECIAL COUNSEL: No.

WALLACE: And will the Senate pass a bipartisan budget deal that is making conservative spending hawks cringe? We'll discuss that and more with White House chief of staff Mick Mulvaney.

Then, just two days before the next Democratic debate, Joe Biden says no more Mr. Nice Guy.

REPORTER: What did you mean when you said you're not going to be as polite in the next debate?

JOE BIDEN, D-PRESIDENTIAL: We'll see.

WALLACE: Presidential candidate and entrepreneur Andrew Yang joins us for an exclusive 2020 sit-down.

Plus, Speaker Pelosi and AOC meet to clear the air.

REP. NANCY PELOSI, D-CALIF.: I call this, we have our differences. Respect that.

WALLACE: We'll ask our Sunday panel about Pelosi's bid to end the infighting in her party.

All, right now, on "Fox News Sunday".

(END VIDEOTAPE)

WALLACE: And hello again from FOX News in Washington.

President Trump is in another ugly Twitter war with another Democratic congressman of color and how Speaker Pelosi is accusing him of another racist attack.

Meanwhile, the House has left town for a six-week recess, but even after the testimony of former special counsel Robert Mueller fell flat, the question of whether Democrats will start impeachment proceedings against the president remains unsettled.

Joining us now is White House chief of staff Mick Mulvaney.

And, Mick, welcome back to "Fox News Sunday."

MICK MULVANEY, ACTING WHITE HOUSE CHIEF OF STAFF: Not much going on this week, Chris. It's good to be here.

WALLACE: Well, let's start with what we didn't anticipate and that is the Twitter war. President Trump attacked Democratic Congressman Elijah Cummings on Saturday, saying that his district in the Baltimore area of Maryland is worse, worse conditions, more dangerous than along the southern border.

I want to put up the president's statements.

His district is considered the worst in the USA. Cummings' district is disgusting, rat and rodent infested mask. No human being would want to live there.

In fact, median household income in the district is in the upper half nationally, and Columbia, Maryland, which is part of the Cummings' district, has been called the safest city in America.

So, what is the president talking about?

MULVANEY: And I think Maryland is -- I think on a per capita basis, or per household basis, the richest state in America. You still see pictures on the Internet of complete poverty in Baltimore, Maryland.

What this is about though is the president fighting back against what he saw as being illegitimate attacks about the border in the hearing this week. If you go online, you can see the questioning that Elijah Cummings did of Kevin McAleenan regarding the conditions at the border. Mr. Cummings saying that children were sleeping or sitting in their own feces, that's just not -- that's not right. It's not accurate, born by the fact by the way that Mr. Cummings has not been to the border in recent memory, certainly not during this administration.

And when the president hears lies like that, he is going to fight back and that's what you saw in those tweets.

WALLACE: This goes back to what happened with the four members of "The Squad". Nobody objects to the president defending his border policies, but this seems, Mick, to be the worst kind of racial stereotype -- let me finish.

MULVANEY: Yes.

WALLACE: Racial stereotyping. Black congressman, majority black district -- I mean, no human being would want to live there? Is he saying people that live in Baltimore are not human beings?

MULVANEY: So, Chris, help me with this. When the president attacks AOC plus three, when he attacks "The Squad" last week, he gets accused of being a racist. When Nancy Pelosi does it a few days later, the left and many members of the media, not you in particular, I want to make that clear, come to Nancy's defense. How it couldn't possibly be racist. That she was simply attacking their ideas.

The president is doing the same. The president is attacking Mr. Cummings for saying things that are not true about the border.

I think it's right for the president to raise the issue of -- look, I was in Congress for six years. If I had poverty in my district like they have in Baltimore, if I had crime in my district like they have in Chicago, if I had homelessness like they have in San Francisco, and I spent all of my time in Washington, D.C. chasing down this Mueller investigation, this bizarre impeachment crusade, I'd get fired. And I think the president's right to raise that. It has absolutely zero to do with race.

WALLACE: You say it has zero to do with race -- there is a clear pattern here, Mick. The fact is that before his inaugural -- before his inauguration, the president tweeted about John Lewis, a black congressman that he should -- this is before his inauguration, he should spend time in his crime-infested district.

Then, two weeks ago, he goes after these four members of "The Squad," all women of color, and says they should go back to the crime-infested countries from which they come. Then he talks about Elijah Cummings and he says his district is rat and rodent-infested.

Infested. It sounds like vermin. It sounds subhuman. And these are all six members of Congress who are people of color.

MULVANEY: I think you're spending way too much time reading between the lines. Does anybody --

(CROSSTALK)

WALLACE: I'm not reading between the lines. I'm reading the lines.

MULVANEY: Does anyone watching this program dispute the fact or the possibility that if Adam Schiff has said the same thing about the border, that the president would be attacking Adam Schiff the exact same way today?

WALLACE: I don't think he'd be talking about his crime-infested, rodent- infested district.

MULVANEY: He very well could. It has zero to do with the fact that Adam is Jewish and everything to do with Adam would just be wrong if he were saying that. This is what the president does. He fights and he's not wrong to do so --

(CROSSTALK)

WALLACE: You're completely comfortable with him saying that this is a rodent-infested district and no human being would want to live there? You're comfortable with that personally?

MULVANEY: Have you seen some of the pictures on the Internet? Just this morning from the conditions in Baltimore, Maryland. Have you seen them?

(CROSSTALK)

WALLACE: You can do that in any inner city in America.

MULVANEY: You absolutely could.

WALLACE: And you could argue, why doesn't the president do something to stop it?

MULVANEY: The richest state in the nation, the richest state in the nation has abject poverty like that. A state, by the way, dominated for generations by Democrats. I think it's fair to have that conversation.

WALLACE: OK. After Robert Mueller's testimony this week, President Trump declared victory. Here he is.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT: This was a very big day for our country. This was a very big day for the Republican Party and you could say it was a great day for me.

(END VIDEO CLIP)

WALLACE: But House Judiciary Committee Chair Jerry Nadler, even after the Mueller hearings, says he's going to go to court to try to get access to documents, try to get access to witnesses like former White House counsel Don McGahn. Here he is.

(BEGIN VIDEO CLIP)

REP. JERRY NADLER, D-N.Y.: There appears to be compelling evidence of the president's misconduct outside of the four corners of the redacted version of the Mueller report. And we will work to uncover that evidence as well.

(END VIDEO CLIP)

WALLACE: This isn't over.

MULVANEY: No, it's far from over. In fact, I don't know if it was in that clip that you just saw a little later in that same press conference or after he got back to his district in New York, but Nadler actually told people he has begun an impeachment inquiry.

Keep in mind, let's not lose sight of the fact that Jerry Nadler is facing a primary from his left in New York. He is falling over himself to become more and more progressive in order to try and keep his job and not lose to the next AOC. No, no. This is not over in their minds, which is just bizarre given what happened this week.

Mueller answered the single one outstanding question. He said -- they asked him, would you have indicted the president if he were not the president? And Mueller said absolutely not, he would not do that. He answered --

(CROSSTALK)

WALLACE: No, that's not what he said. No, that isn't what he said. He said we didn't because of the OLC, the Office of Legal Counsel guidelines. He said we didn't even make a decision on that.

MULVANEY: He got asked the question by Congressman Lieu, who I know, said would you have indicted him if he were not the president, and he said, yes, we would have and we went back to the beginning of a second hearing --

(CROSSTALK)

WALLACE: Right, and that's when he said -- he said, yes, he did, I agree. But what he said was that we -- I wouldn't have made it -- we didn't even make that decision because the guidelines prevented us from doing that.

MULVANEY: I actually just think you're wrong on that. If they could --

(CROSSTALK)

WALLACE: The record will show what it shows. I promise you you're wrong.

MULVANEY: If they had the evidence to indict the president, they would've done it and they don't because there was no obstruction. You can go through the details about what Mr. Mueller --

WALLACE: OK, let's look at that, because despite the president's claim of total vindication, the special counsel, and his testimony was not a moment in history, but he made it clear he's not saying the president did nothing wrong. Take a look.

(BEGIN VIDEO CLIP)

NADLER: The report did not conclude that he did not commit obstruction of justice. Is that correct?

ROBERT MUELLER, FORMER SPECIAL COUNSEL: That is correct.

NADLER: Did you actually totally exonerate the president?

MUELLER: No.

REP. ADAM SCHIFF (D-CA): Your investigation is not a witch hunt. Is it --

MUELLER: It is not a witch hunt.

SCHIFF: When the president said the Russian interference was a hoax, that was false, wasn't it?

MUELLER: True.

(END VIDEO CLIP)

WALLACE: Not a witch hunt, not a hoax and the president is not exonerated.

MULVANEY: And that last one which is the second clip you just played is probably one of the most offensive things I've seen on television from a federal government employee since I've been here, and there's a fairly high bar for that. Did not exonerate the president.

There is no way to exonerate the president. That's not the job of a special prosecutor. You don't get exonerated. You are innocent until proven guilty. In fact, I think it was Congressman Turner from Ohio raised that issue in another clip.

WALLACE: So did Ratcliffe, I agree.

MULVANEY: Exactly.

WALLACE: But he specifically said -- because the president says he was exonerated. I'm just simply --

MULVANEY: You're innocent, you know it, I know it. You're innocent until proven guilty. They could not find enough evidence to convict them -- excuse me, to charge him with any crime.

This is over. Most folks know that it's over. In fact, if you go back and watch the response of most Democrats during the day, they knew it was a disaster, they knew it was over but you still have Mr. Nadler and a small part of this Democrat Party, the left wing of the party, bringing the entire party to the left, to continue impeachment proceedings, just bizarre results.

WALLACE: OK, let's move on. The Senate votes this week on a bill that would extend spending limits and also extend the debt limit into 2021. This is what the bill would do. It raises spending by $324 billion over spending caps, and runs out the clock on sequestration. No more forced spending cuts.

Question, does the president want the Senate to pass it and if it does, will he sign this bill?

MULVANEY: Yes, and yes. Keep in mind the bill spends more money than the president wanted to spend. There's no question about that.

But as I've said on this show and you and I have talked before, elections have consequences. And when the Democrats won back the House, everybody knew we were going to end up spending more money.

So, what did we get in exchange? We got more money for defense, which we think we need. We get more money for the V.A. which we think that we needed. And, this hasn't gotten nearly the attention, we got protections for the Republican policies that were in the previous year's bills. Keep in mind there's policy riders that go on appropriations bills where lawmakers who spend money try and use that money to change policy outcomes.

And the Democrats wanted to limit our policies on the border. They wanted to limit our policies regarding pro-life. They want to limit our policies regarding deregulation, and we won on every single one of those.

So did we spend more money than we wanted to? Yes. Did we get a lot in return? Yes.

WALLACE: But candidate Trump back in 2016 promised that he was going to balance the budget and you, when you were a member of Congress, were a big deficit hawk. Take a look.

(BEGIN VIDEO CLIP)

TRUMP: We can balance the budget very quickly.

SEAN HANNITY, HOST: Do you think in five years?

TRUMP: I think over a five-year period and I don't know, maybe I could even surprise you.

MULVANEY: We are not paying for the government that we are getting. And unless we're going to continue to steal money from our kids, we have to make a very difficult choice, which is, are we going to raise taxes or are we going to reduce spending?

(END VIDEO CLIP)

WALLACE: But look at these numbers.

MULVANEY: Look at the hair on --

(CROSSTALK)

WALLACE: I wasn't going to comment on that fact, but yes, age hasn't helped either of us.

Look at these numbers. After dealing with the great recession in his first term, the deficit under Obama dropped by an average of 11 percent a year in his second term. The deficit has increased by 15 percent a year in President Trump's first two years. Under President Trump, our national debt has increased by more than $2 trillion. And if this bill goes through, estimates are the Trump debt will top $4 trillion.

How can Mick Mulvaney, budget hawk, support this?

MULVANEY: Yes, take our budget. Adopt our budget. The media and the press --

(CROSSTALK)

WALLACE: Yes, but that's always dead on arrival. This is the bill --

MULVANEY: Dead on arrival is the word that everybody always uses, but if you actually went to look at it and saw what Donald Trump would do if he could pass spending bills, which he can't, you would be on your path to balance and the deficit would be down. Congress spends money.

WALLACE: You had -- wait a minute, you had Republican control of Congress for the first two years.

MULVANEY: Yes, who also threw our budgets in the trash, as well as dead on arrival. You asked me about Donald Trump. If Donald Trump were in charge, if Donald Trump --

WALLACE: He's the president.

MULVANEY: But you also know your Constitution, which is that Congress spends the money. We have to deal with the Democrats in the House. We have to deal with Democrats in the Senate, because of the 60 vote rules. We are always going to spend more money when Democrats have that seat at the table.

WALLACE: OK. Thirty seconds, your reaction to the Supreme Court saying you can spend that $2.5 billion in Pentagon money for the wall.

MULVANEY: It's the right decision. We'll build about 100 miles of wall. We'll be at four miles a week by the fall, probably higher than that in the next year. And we are still on schedule to have 450 miles of wall built by the end of 2020.

WALLACE: Mick, thank you. Thanks for coming in. Always good to talk with you, sir.

MULVANEY: Thanks for having me.

WALLACE: Up next, we'll bring in our Sunday group to discuss the sticking points for conservatives over that big spending bill.

Plus, what would you like to ask the panel about Democrats statements they are just getting started after the Mueller hearings? Just go to Facebook or Twitter, @FoxNewsSunday, and we may use your question on the air.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

NADLER: If our committee is going to recommend articles of impeachment to the House, we must make the strongest possible case.

REP. KEVIN MCCARTHY, R-CALIF.: Why would you ever even bring up impeachment after yesterday's hearing? That should be put to bed. That is over. We watched it, we've heard it, we've read it. What more can they make up?

(END VIDEO CLPI)

WALLACE: House Judiciary Committee Chair Jerry Nadler and House Republican Leader Kevin McCarthy with very different takes on where the House is on impeachment after Robert Mueller's testimony this week.

And it's time for our Sunday group, GOP strategist Karl Rove, columnist for "The Hill", Juan Williams, former Democratic Party chair, Donna Brazile, and cofounder of "The Federalist," Ben Domenech.

Before we get to impeachment, I've got to ask a couple of you about the tweets.

Your reaction to the president's tweets about Elijah Cummings of Baltimore?

DONNA BRAZILE, FORMER DNC CHAIR: He was not only attacking the chairman of the Oversight Committee, he was attacking the entire southern district of Maryland, which includes Baltimore City and the rest. The president is absolutely wrong.

When lawmakers are questioning his policy, questioning the implementation of policy, the president goes after these lawmakers in a personal way. I think it's wrong but, of course, this is the president's strategy.

WALLACE: Do you think he's racist?

BRAZILE: You know, I don't know what is in his heart but this is a repeated pattern that we've seen for the last several years.

WALLACE: Karl, you hear people close to the Trump campaign saying that the president can kind of walk up to the line of racist tweets, racist rhetoric, mobilize his base and then step back from it without alienating a lot of other people that he's going to need for his suburban college educated people. Is this a good political strategy?

KARL ROVE, FORMER BUSH WHITE HOUSE ADVISOR: This didn't advance it. If that was his goal, this didn't advance it. I mean, he attacked a city, he attacked her district, he attacked a people, he painted an ugly picture. I don't think this helps the president's cause whatsoever.

And look, I don't know what is in his heart, but I don't see him as a racist, but this is the kind of thing that will cause people even who accept that view to say, Mr. President, why are you doing this? You've got better things to do with his tweets.

WALLACE: OK. Let's move on to the question of impeachment -- 101 members of the House, I think one independent, former Republican, and 100 Democrats now in favor of at least impeachment proceedings.

How big a mistake for Democrats for 2020 if they go down this road?

ROVE: Big. In January, "The Washington Post" ABC poll said 38 percent bought the house ought to begin, 57 percent said they shouldn't. We had in March, the end of the investigation. April, we had the report. Now, in the latest July "Washington Post"'/ABC poll, it is 33 percent say they should begin. Sixty-three percent oppose beginning impeachment hearings.

Now, having said that, they're going to put -- they're going to have a pseudo hearing. They're not going to go to the floor and ask for a vote of the House to move forward with impeachment proceeding, but it's clear that 15 out of 24 Democrats on the House Judiciary Committee, 16 if you include Nadler, are in favor of impeachment and they are moving ahead.

The Democrats, Nancy Pelosi is now in purgatory. She can -- they're going to continue to move forward on impeachment through the Judiciary Committee, dominating the headlines whatever they want, drowning out what they're doing in the House, drowning out Democratic presidential candidates, and there's nothing Nancy can do about it.

WALLACE: We asked you for questions for the panel. And on this issue of what should happen post-Mueller, we got this on Facebook from Bill Thrower: Mueller said he was unable to indict a sitting president for obstruction but others in his administration or campaign are not immune to indictment. So why has no one else been indicted? Is Mueller implying the President Trump committed obstruction by himself?

Donna, two questions. One, how do you answer Bill? Secondly, what does Nancy Pelosi do to control the drive for impeachment among a lot of her fellow Democrats?

BRAZILE: Well, I'll take the second first. I mean, Speaker Pelosi cannot drive the conversation, because the conversation started a long time ago. It started before she even became speaker for the second time.

There's a very healthy debate going on in our country now in terms of whether or not the president is abusing his power. The House Judiciary Committee will continue to proceed along the facts and gain information. I don't know if it will ever come to a vote on the House floor.

But as of now, Democrats believe this president must be held -- held responsible not just for his actions, but he should be held responsible for the things that he is doing to our Constitution.

WALLACE: Let's turn to that budget deal that the Senate is going to consider this week, which would extend spending for two years and a debt limit for two years into 2021, take them out of the presidential race in 2020. And here's what the Senate Republican leader, Mitch McConnell, had to say about that bill.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL, R-KY: I make no apologies for this to your caps deal. I think is the best we could have done at a time of divided government. The alternatives were much worse.

(END VIDEO CLIP)

WALLACE: Then, as I mentioned to Mick Mulvaney, this increases spending by over $300 billion over the next two years.

How much heartburn is it causing conservative Republicans?

BEN DOMENECH, THE FEDERALIST: I think it's causing a lot of heartburn. I think there are a lot of people who feel like this is kind of the end of the Tea Party era in a lot of different little respects.

But this is all kind of connected in a way because what we see now from the American Congress, both on the Republican and Democrat side of the aisle, is there's no actual demand on them to legislate, to go through the process of negotiation the way that they ought to. Instead, you have these big deals that are crafted that no one's really happy with but then you have to have them swallowed, just as Nancy Pelosi got her entire -- the bulk of our conference to swallow this deal. And it doesn't really leave anybody satisfied because the job of the congressman now is essentially to be a hype machine for national partisan issues as opposed to legislating in a way that would be representative of their district.

WALLACE: OK. So, you put the finger on Congress, but what about President Trump? I mean, he's got Mick Mulvaney, who made his bones as a budget hawk. Why did he accept this deal?

DOMENECH: I think he accepts this deal for the political reality of kicking the can down the road. But I also think that this is a deal that is the sort of things you could see under any president and it's going to continue to be a problem for the American people that we have a budget process that is totally broken, that doesn't work either under President Obama or under President Trump.

WALLACE: Juan, the key players in this negotiation -- reporting is that Mulvaney was basically kept out of it because Democrats thought he was too much of a budget hawk, so the key players in the negotiation were Speaker Pelosi for the Democrats and Treasury Secretary Mnuchin, more of a dealmaker, for the Republicans. Which of the two of them do you think came out better in this deal?

JUAN WILLIAMS, POLITICAL ANALYST: Do you really want the answer? It's pretty obvious. I hope everybody sees that Nancy Pelosi is the queen. She is majestic on this run. She held her caucus together she got a bigger increase in terms of social domestic spending that Trump got and he makes defense spending his be-all and end-all. She got more money.

In fact, in this deal, Chris, you see a faster rate of increase in nondefense spending under President Trump then you had under President Obama. So, the Democrats are doing better in terms of spending for these social programs under President Trump than they did under Obama.

I come back to something Ben was talking about, which is, you know, the Tea Party, the Freedom Caucus, this was a drive to take over Washington -- spending out of control under Obama, deficits rising, deficits are rising faster now and you see a divided Republican Party on this front.

You only got 65 of 197 Republicans in the House to vote for this. And, obviously, they're all in fear of Trump and his political power. But you can see the demise of so much of the instinct, the drive that pushed them to power in the first place, which was about smaller government. Apparently, that's gone.

DOMENECH: The constituency for that is much smaller than it turned out to be.

WALLACE: Let me ask you about that, Karl, because conservatives used to talk about president you worked for, George W. Bush, Bush 43, and say he was a big government conservative. Where does Donald Trump fit on that scale?

ROVE: Well, I'm not certain there's a coherent political philosophy behind there, but, look, let's inject just a little bit of restraint here. Yes, the deal allows for up to $320 billion in additional spending by removing the caps that were in the 2011 budget bill, but it doesn't say that we are going to spend $320 billion more. Now, we have to fight over 13 individual appropriations bills.

So, two-thirds of the Republicans said we are not voting for this, we think it stinks. Those Republicans plus the 65 who voted for it now have a chance in the House and the Republicans in the Senate to say, OK, we want to spend x out of the $320 billion, we don't want to spend that much. So they have the ability and the fights over these individual spending bills.

We basically got rid of the caps and we said, we're not going to have a needless fight over the debt ceiling until 2021, but it -- we will absolutely have a fight over each and every one of those spending bills.

WALLACE: So, are you suggesting that there may -- because let me just quickly explain. They set spending limits. You can't spend any more than this, but you're not saying you have to spend that.

ROVE: Right.

WALLACE: And there wasn't any money appropriated. Are you saying we're going to end having a government shutdown?

ROVE: No, no, I don't think so. But I do think we're going to have -- I slightly disagree with Ben. I think we're going to have a lot of legislating as people go through these appropriations bills and the test will be, do the Republicans stand up and say we want less spending rather than more spending, or do they just simply say, you know, here's what I need for my district? We'll see.

WALLACE: We have to take a break here, panel. See you all a little later.

Up next, he's a former tech entrepreneur running as the anti-politician in 2020 with an online following that's earned him a spot on the debate stage. Andrew Yang joins us live for a "FOX News Sunday" sit down with the 2020 presidential candidates.

(COMMERCIAL BREAK)

WALLACE: Coming up, his underdog campaign is getting a big boost from an online fan base.

(BEGIN VDIEO CLIP)

UNIDENTIFIED FEMALE: Your next president of the United States, Andrew Yang!

ANDREW YANG, D-PRESIDENTIAL CANDIDATE: Thank you! Thank you, Washington, D.C.!

(END VIDEO CLIP)

WALLACE: Andrew Yang joins us for a 2020 sit-down, next.

(COMMERCIAL BREAK)

WALLACE: His supporters call themselves the Yang Gang. They chant PowerPoint at his rallies and wear ball caps with "M-A-T-H" on the front for "Make America Think Harder."

Joining us now for an exclusive “Fox News Sunday” sit down, Democratic presidential candidate and entrepreneur Andrew Yang, who will be on the debate stage this week.

Mr. Yang, welcome to “Fox News Sunday.”

YANG: Thanks for having me, Chris. It's a pleasure to be here.

WALLACE: Let's start with the latest Fox News poll that came out this week. It shows you tied for sixth place with Amy Klobuchar at 3 percent, 30 points behind Joe Biden, but running ahead of Cory Booker and Beto O'Rourke and Julian Castro.

So I have kind of a good news/bad news question, which is, why do you think you're doing better than a lot of better-known politicians? And then the other hand, how do you ever make the big jump that you still have to make to get into the top tier of candidates?

YANG: Well, on the positive side, America, unfortunately, has lost a lot of confidence in its politicians. It's one reason why I'm doing so well, I'm beating many sitting senators and governors.

The American people realize that our government is way behind the curve in solving the real problems. And we need to catch up and speed up. And they see someone like me as someone who can help make that possible.

In terms of making the big jump to catch up to Joe Biden and the other leaders, most Americans are just tuning in to who's running in 2020. I'm still introducing myself to the American people. It's going to be a very, very fluid race over the weeks and months to come. I'm very confident I'm just going to keep on climbing the polls and start catching up to the leaders very soon.

WALLACE: You say people are just tuning in, but if they tuned in to the first Democratic debate, they didn't see much of Andrew Yang. You ended up getting -- I had to get check this out -- two minutes and 50 seconds total in a two hour debate, by far the least amount of time of any of the Democrats in the two debates.

What's your plan to get more airtime this week?

YANG: Well, I got asked two questions in two hours, which certainly was not enough, but we're very confident that this Wednesday I'm going to have much, much more of an opportunity to make my case to the American people that the real central issue is that we're automating away millions of first manufacturing jobs and now retail jobs, call center jobs, and on and on through the economy.

And because of the polling support we have, I'm not going to have just next week in Detroit. I'm going to have also September in Houston and on and on. My campaign is going to be here the entire way.

WALLACE: I want to talk about your policy proposal and automation in a moment, but just to get back to the debate, one way that is tried and true to get more attention and airtime is to go after the front runners. You're going to be on the stage on Wednesday night with two of the front runners, Vice President Biden and Senator Harris.

Any thoughts about going after them, one, because you have differences on issues, and, two, because it will get you more attention?

YANG: Well, my focus is on solving the problems of the American people. And to the extent that I can drive the conversation towards those issues, I'm very, very excited about it.

I don't think that we benefit if I'm throwing rocks at other candidates when, frankly, I agree with them on many, many issues. And I think right now my focus really is on still introducing myself to the American people.

WALLACE: One of your main messages, which you referred to a moment ago, is that you say that this country is going through a dramatic, economic transformation, in large part because of automation. And you say that you will keep the promises to working-class Americans that President Trump has failed to keep to them. Here you are in the first debate.

(BEGIN VIDEO CLIP)

YANG: I can build a much broader coalition to beat Donald Trump. It is not left, it is not right, it is forward. And that is where I'll take the country in 2020.

(END VIDEO CLIP)

WALLACE: You propose what you call the American Mall Act, like shopping mall act, with a $6 billion fund.

How would that work?

YANG: Well, we're in the process of automating away the most common jobs in the U.S. economy, which includes retail worker, call-center worker, truck driver, food service. These are the jobs that are disappearing around the country. And, unfortunately, they're also the most common jobs.

So Amazon is closing 30 percent of our malls and stores and paying zero in taxes while doing it. And these malls become sinkholes. They cause blight, become havens for crime and bad actions. So we need to help communities transition these malls to become community centers or schools or even residential. But in the absence of that kind of move, these ghost malls become the last place anyone wants to be and they destroy property value for miles around.

WALLACE: But what you do you do -- if automation is the problem, what do you do to help the worker who has skills for an earlier era transition and get a job in these times?

YANG: The first big step is we need to have everyone share in all of the gains from this progress and innovation. My flagship proposal of freedom dividend would put $1,000 a month into the hands of every American so that if your mall closes or your job gets blasted away, you at least have $12,000 a year that helps take the pressure off and helps you transition in a better -- better direction.

WALLACE: But are you basically on your own? In other words, are you going to provide retraining programs? Are you basically saying, here's $12,000, help yourself?

YANG: Well, we certainly need to invest in the retraining of the American people, but we also have to be honest that we're terrible at retraining. The success rates for federally funded retraining programs for the displaced manufacturing workers in the Midwest were between zero and 15 percent. And pretending that we're somehow going to become excellent at retraining Americans is lying to the American people.

I was just at a truck stop in Iowa. If you went to those truckers and said, we're going to retrain you to be coders or engineers, they would be more likely to punch you in the face then sign up. So we need to put the resources directly into our hands, the hands of the American people. Certainly we need to invest in retraining programs, but we also have to be realistic about what we can and can't accomplish.

WALLACE: OK, let's talk about some of the concerns about your big program, the freedom dividend, which is also called UBI, Universal Basic Income. $1,000 a month to every adult, everybody over 18, regardless of whether your Jeff Bezos or you're the guy on the street, $12,000 a year.

YANG: Bezos, yes.

WALLACE: Estimates are that your plan would cost about $3 trillion a year. And the main way that you would do it -- you have some other methods, but your main way is a value-added tax, a VAT, the kind of sales tax they have in Europe, which is what you say would -- would pay for this.

First of all, it's basically a sales tax, which, as you know, is one of the more regressive ones. And, secondly, independent groups like the Tax Foundation say -- and they've looked at all of your plans -- they say that your numbers don't add up. That, in fact, what you would get from all of this is less than $500 a month per person, not $1,000 a month per person.

YANG: First, the headline cost is much lower than $3 trillion because we're already spending over $1.5 trillion on various direct income support programs. But if we put a mechanism in place where the American people get a sliver of every Amazon transaction -- and, again, Amazon's a trillion dollar tech company that paid zero in taxes last year. If we give the American people a sliver of every Amazon transaction, every Google search, every FaceBook ad, every robot truck mile, we can generate hundreds of billions in new revenue.

And the great thing is, when we put this dividend into your hands, this thousand dollars a month, where does the money go? The money goes right back into local communities and the economy. It goes to car repairs and day care and little league sign-ups, all the things that make us healthier and stronger and would help create millions of jobs around the country.

WALLACE: But I want to pick up on something you just said. Well, this, whatever it is, with get -- pay a million -- a trillion and a half dollars a year in money transfers. That's one of the concerns because some conservatives are saying, well, look, if we were giving everybody $12,000 a year, we could replace the welfare state. So, yes, everybody's going to get the Andrew Yang freedom dividend, but then the conservatives can do away with social programs that a lot of people at the lower end of the income scale depend on.

YANG: Well, my program is universal, but it's opt in. And if you opt in, then you'd be forgoing benefits from certain existing programs. And so this, to me, would be a win-win-win where you have these resources in the hands of the American people, you don't have restrictions on how people spend it and you also get rid of a lot of the negative incentives because the fact is a lot of these programs give you less if you do better and we have to make it so that if you do better, you do better.

WALLACE: Final -- final question, and this is another concern people have, look, when you work, you get more out of it than money. You get self- esteem. You get social interaction. There's a lot of things. And some people are concerned that with your, in effect, $12,000 a year handout, that your delinking income from actually earning a living.

YANG: Well, I'm Asian, so you know I love to work. But you have to be a little bit broader about how you think about work. My wife is at home with our two young boys, one of whom has autism. What is the market value of her work at right now? Zero. And we know that's the opposite of the truth. We know the work she's doing is among the most challenging and vital work in our society. So we need to think bigger about what we mean by work.

But most Americans know that putting a bit of money into your hands is going to make you work harder in many contexts and it's certainly not going to take someone who wants to work and say like, oh, I'm going to kick back, because a thousand dollars a month is not enough to thrive in any environment.

WALLACE: Mr. Yang, thank you. Thanks for sharing your weekend and your ideas with us. And we'll be tracking how much time you actually get to speak in the debate this week.

YANG: Thank you, Chris. Hopefully I'll see you in Detroit.

WALLACE: Well, no, you won't, but that's a -- that's not a Fox debate. But we would like to do one. Thank you.

WALLACE: Coming up, House Speaker Nancy Pelosi plays down tensions after a meeting with freshman Congresswoman Alexandria Ocasio-Cortez. We'll discuss the Democratic divide when our Sunday group returns.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

QUESTION: What did you mean when you said you're not going to be as polite in the next debate?

JOE BIDEN, D-PRESIDENTIAL CANDIDATE: We'll see.

(END VIDEO CLIP)

WALLACE: Democratic frontrunner Joe Biden promising he's going to be much tougher on his rivals in this week's presidential debates in Detroit, and we're back now with the panel.

Well, Karl, what do you expect from this next round of Democratic debates, and how do you explain the fact that despite his performance in the first debate, which was almost universally panned, that Joe Biden is still leading this Democratic field in the latest Fox poll this week by better than two to one?

KARL ROVE, CONTRIBUTOR: Yes. Well, he's got the biggest name ID, the biggest reputation, the biggest knowledge base. And also the attack by Harris was -- was a cheap shot. It turned out that they both had the same view, that they opposed federal government imposing busing but they accepted local school districts imposing busing. So, you know, that's what happened in her situation and they ended up being the same.

Also, Harris turned out to be a -- a not so good candidate. We've now seen her flip-flop on -- is she in favor of the Medicare for all, getting rid of all personal health insurance are not? She's been flipping, flopping on that. She's been flipping, flopping on a couple of other issues. She's not very clear. So she got a little bit of a bump, but she's falling back. They don't have a good alternative yet to Biden.

Having said that, what matters is who's got the best ground game in Iowa and does somebody seize a moment like Barack Obama did in 2008 and turn that ground game and the moment into a surprise upset in Iowa?

WALLACE: Juan, Biden will be standing Wednesday night between Kamala Harris on one side and Cory Booker on the other, both of whom have hit him on his record on race.

Given the fact that -- that support in the African-American community is the strongest pillar of his support in the primaries, that's where he really separates from the rest of the field, how hard do you expect them to go after him on Wednesday night?

JUAN WILLIAMS, POLITICAL ANALYST: Oh, it's going to be tough. I mean he's going to -- it's going to be a pincer movement just visually as you describe it.

Look, Biden lost seven to eight points in most polls after the last debate. The big winner was Harris. I disagree with Karl on this. I think Harris has proven to be a very strong candidate, able to move up in the polls, move up in terms of fundraising, move up in terms of name ID. People just know who she is given what you just talked about with Andrew Yang.

The second thing is that it's forced Biden to try to shore up his support. This week we had an NAACP convention in Detroit. The Urban League as in Indianapolis. Biden's out there with a new criminal justice plan. He's gone to South Carolina to apologize for saying that he worked with segregationists in the past.

And the reason for that is the cautionary tale of Hillary Clinton back in 2008. She had all the big endorsements. It looked like she had strong black support and then here comes Barack Obama, who does well enough in Iowa -- he wins Iowa, in fact, and then goes to South Carolina, which is going to set the parameters for all the southern primaries that follow large black constituencies and Obama beat Clinton by 29 percentage points in South Carolina and goes on to win it all. Biden doesn't want to see a repeat of that scene.

WALLACE: Donna, where do you see this Democratic race at this point going into these debates?

DONNA BRAZILE, CONTRIBUTOR: Well, first of all, I'm very excited. Night one is going to be the most exciting day, for two reasons. One, we have Elizabeth Warren and Bernie Sanders. I mean we have a progressive lane that we all know has been congested over the last couple of months and we're going to see which of those two have a real good plan for Medicare for all and many of the other -- ending college debt, et cetera.

WALLACE: But, wait a minute, they say that they're friends and they're not going to attack each other.

BRAZILE: Well, they may not attack each other, but they -- they will have to distinguish themselves. Elizabeth Warren has been coming up in the polls. She has a plan for everything. Even a plan for defeating Donald Trump.

So I think night one is going to be interesting. But, you know, night two is not just about race and Joe Biden and his standing. Night two is also these other candidates who are trying to play catch-up. They didn't have enough time, as you just heard from Andrew Yang, to introduce themselves. Night two is going to be also a very good evening for Democrats in the country.

WALLACE: Meanwhile, Nancy Pelosi and Alexandria Ocasio-Cortez met on Friday for half an hour to try to work out their differences. There they were afterwards.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI, D-CALIF.: It's like you're in a family. In a family you have your differences. But you're still a family.

REP. ALEXANDRIA OCASIO-CORTEZ, D-N.Y.: I'm looking forward to us continuing our work and, as always, I think the -- the speaker respects, you know, the -- the fact that we're coming together as a party.

(END VIDEO CLIP)

WALLACE: So, Ben, do you think that it's all sweetness and rainbows and lollipops in the Democratic caucus? And -- and, seriously, how much do you think AOC and the other members of "the squad," the more progressive members, threaten Pelosi's control of the caucus?

BEN DOMENECH, "THE FEDERALIST": I think it's a significant long-term threat for the Democratic Party. Families can be dysfunctional too and in all sorts of ways. And I think in this circumstance, you know, we saw this week the power of Nancy Pelosi work in one way. You had, you know, the Mueller hearings sort of go down the way that she actually thought it was going to go down, a disappointing summer reboot if it was the movie version of the book. You had her getting all of her conference together really when it came to this budget deal, including AOC at the last minute making the decision to support that.

But in terms of what's going forward, with the future looks like for the Democratic Party. The fact is that these young members, who have come in, have a real message, a theory of the case that is a critique of the Obama administration, that under -- that they view it as being -- having taken a route was too pro-corporate in lots of different ways, of not going down a road differently on health care perhaps that they would have liked to see in that -- in that case. And they're very much of a progressive mind-set on all these different areas and they're not going away.

They have huge microphones. They have a huge following. It's only going to increase. And I think that in the long term, this type of -- of divide within the Democratic Party could prove difficult when it comes to winning national elections. They plan into President Trump's argument that the Democratic Party is too radical for the moment. So even if you don't like him, even if you don't like where he is, this is what you have to look forward to in a future administration.

WALLACE: But -- but what about the argument that Nancy Pelosi made when she wasn't being so consolatory, hey, these are just four congresswomen, four votes, when they had the big bill about humanitarian aid to the border, all they got was their own votes.

DOMENECH: The votes that they have are far less important than their ability to reach out and change the narrative. This is what we saw with the Tea Party as well. The fact that they had a certain number of members who were in -- of this particular mind-set was far less important than what they represented. The ability to challenge significant statewide politicians. And to, you know -- in Karl's own state of Texas, knock off someone as powerful as David Dewhurst in the case -- the case of Ted Cruz, sends a message to Washington.

Now, these are just four members of Congress. Of course this is not the kind of movement that we've seem take on nationally. But I do think it's one that is growing and it's going to particularly grow among young, left of center voters.

WILLIAMS: They are best known among Republicans according to the polls. And why is that? Because they are convenient foils for Republicans to say, oh, all this Democrats are socialists.

We were just talking about the ongoing race. Who's the leading candidate? Oh, Joe Biden, Kamala Harris, Elizabeth Warren. These aren't radicals.

DOMENECH: And their agenda -- but their -- their --

BRAZILE: And they're energizing the party --

DOMENECH: But their agendas are going to end up closer to where AOC and where Omar and where these other candidates are than they will to the Joe Biden of just four years ago.

BRAZILE: But -- but they have been -- they have energized the party. They're helping to redefine the party. But they are not the -- at the leadership table. Nancy Pelosi is still the leader of the Democratic Party.

ROVE: Yes, but they are systematically calling for challenges to Democrats. It's not an accident. They're challenging the Jerry Nadler from the left. They're challenging the chairman of the House Ways and Means Committee from the left. And as a result, Democrats are being pulled to the left.

How many people would have normally stood up there and said, yes, I'm for the green new deal after the goofy piece of document that they laid out talking about cow flatulence? How many people would have stood up and said, we're in favor of some of these other things that they're doing?

They are driving the narrative. I agree with Ben, they -- their -- their control is not in numbers, it's in the voice. And the voices is going to get larger because the Republicans are going to pay attention to it, the media likes it and they have mastered social media to a degree that it really is driving -- driving a lot of incentive in the party (ph).

WALLACE: What about that argument, Donna, that, yes, I mean in terms of their effect on the House is limited, but in terms of their effect in the national conversation and politics, in other words, as an inside game, the caucus, there's an outside game, Twitter followers?

BRAZILE: Well, look, they have a lot of Twitter followers. But you know what, we need people who can move legislation. We need people who can move votes. They are very good in terms of helping to grow the Democratic Party, but I don't see them right now setting the narrative for 2020. Not yet.

ROVE: Well, look, nobody knows what the House Democrats have done in the way of passing bills, but they know lots about AOC and Tlaib and Omar and Pressley in this -- this element. And its only going to get worse.

BRAZILE: And we have President Trump and his tweets to also thank for that.

WILLIAMS: And I think the GOP has been broken down by Trump. I mean the GOP is just basically the party of Trump behind that. I don't think you can say that about the Democrats.

ROVE: Nice dodge. Nice dodge, Juan, trying to change the subject as --

(CROSS TALK).

WALLACE: You're -- you're all pretty good at that.

(CROSS TALK)

WALLACE: I want to say, I thoroughly enjoyed the last two or 3 minutes. I just sat there and watched the panel work.

Thank you, panel.

BRAZILE: Well, Chris, as a -- as -- but as a woman, I am so proud of them. Proud of them.

WALLACE: See you next Sunday.

As a man, I'm proud of them, too.

Up next our "Power Player of the Week" If there's another vacancy on the Supreme Court, he will help fill it.

(COMMERCIAL BREAK)

WALLACE: Supreme Court watchers pay close attention to the days between the court's terms. Watching for any sign a justice may retire. As we reported last summer, if President Trump gets to fill a third court vacancy, he'll almost certainly reach out to our "Power Player of the Week."

(BEGIN VIDEOTAPE)

LEONARDO LEO, EXECUTIVE VICE PRESIDENT, FEDERALIST SOCIETY: The job of a judge is to enforce the Constitution as it's written.

WALLACE (voice over): Leonard Leo is executive vice president of the Federalist Society, which advances the cause of limited constitutional government.

In Washington, he's known by a different name.

WALLACE (on camera): You have been called President Trump's Supreme Court whisperer. How do you plead?

LEO: I don't remember ever whispering. And I know he's never whispered.

WALLACE (voice over): Leo is back in the spotlight any given summer if a justice on the aging Supreme Court retires at the end of the spring term.

Anthony Kennedy retired last summer.

WALLACE (on camera): Do you, given your role, do you think to yourself, we're headed into the regular season now?

LEO: Every June we think about that. Yes, absolutely.

WALLACE (voice over): Leo has already helped get five justices on the court. He organized conservative support for Clarence Thomas and John Roberts and Sam Alito. But his role increased dramatically when candidate Trump asked him to draw up a list of potential nominees, which included Neil Gorsuch and Brett Kavanaugh.

LEO: What you see in that list of 21, now actually I think 25, is probably the best and brightest, you know, individuals on the bench.

DONALD TRUMP, PRESIDENT: Judge Gorsuch has outstanding legal skills, a brilliant mind, tremendous discipline.

WALLACE: Just days after he took office, President Trump nominated Federal Appeals Court Judge Neil Gorsuch, who was on Leo's list.

JUSTICE NEIL GORSUCH, SUPREME COURT: I will do all my powers permit to be a faithful servant of the Constitution and laws of this great country.

LEO: It's always been a point of contention for --

WALLACE: Leonard Leo has been pushing his originalist philosophy for more than a quarter century. The idea that the words of the Constitution should be interpreted as they were commonly understood when it was written.

Outside his office there's a photograph of the Supreme Court's chambers of Justice Antonin Scalia, the prime mover of originalism over the last half- century.

WALLACE (on camera): Is this the inner sanctum of originalism?

LEO: That's why it's hanging here outside of my office, because this is the place -- this is the originalist temple.

WALLACE (voice over): Leo is modest about what his role will be if there's another vacancy on the court, saying it's up to the White House. But there's little doubt, if President Trump makes another nomination, Leo will be at the center of the action, and he could not be more committed.

LEO: This is really at the core of his legacy. You're dealing with a fundamental transformation in the federal bench. It's about as inspiring and motivating as anything has been in my professional life. It's like nothing I've ever experienced, Chris. It's really incredible.

(END VIDEOTAPE)

WALLACE: Leo wouldn't tell us if he has a new favorite for the Supreme Court on that list of 25. He says you could throw a dart at the list and get a solid conservative.

And that's it for today. Have a great week and we'll see you next “Fox News Sunday.”

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