>> never miss an episode of the "the five." "special report with bret baier" is next. are you there. >> bret: thanks. from sunny california. this is a fox news alert. i am bret baier coming you to from the ronald reagan presidential library in the simi valley town. we are following major breaking stories. michael flynn pleads guilty to lying to the fbi. he is agreeing to cooperate with special counsel robert mueller and may testify against other members of the president's transition team. his white house or even possibly against the president himself. we only know what is in the court fileings so far. the president's lawyers are already firing back. republicans senators say passage

of the tax reform bill is not if but when. we will head there live if the senate majority leader leaks. wall street took a nose dive after the flynn report but bounced back after mitch mcconnell said he has the votes to pass tax reform. in the end the dow lost 40 after being down more than 250 at one point today. the s&p 500 fell 5 and the nasdaq dropped 26. the illegal immigrant acquitted of murder in the shooting dating of a san francisco woman last night is the subject of a federal arrest warrant. jose garcia zarate was found not guilty yesterday in the killing of kate steinle. and secretary of state rex tillerson is laughing off reports he is about to lose his job. his boss is backing him up on twitter. a lot of news today.

we begin with the russian investigation. catherrine is at the d.c. district court with the latest. >> general flynn is rider to fully cooperate and that raises the steaks for president trump and jared kushner and other members of his inner circle. after 33 years of military service, national security advisor michael flynn pled guilty to a felony: lying to the nib. -- the fbi. democrats placed the plea as a milestone. >> there is broad exposure between the transition team and the administration. i don't think we have seen the end of this. >> with his wife in the front row, flynn waived his right to a trial by pierce. -- peers. he will cooperate with the

robert mueller russia investigation. flynn sat down with fbi agents and misled them about his contact with a russian ambassador kislyak. >> this turns up the pressure on other individuals. it causes people in the white house to wonder: what is coming next? who will go next? i think all of that is designed to get cooperation from these people and for mueller to send a signal to the white house he is playing hard ball. >> republicans disagreed. >> there is no evidence indicating there is any connection between general flynn and the president involving russian collusion. >> flynn said it's been extraordinarily painful to endure months of false allegations of treason. he said what he did was wrong and through his faith he would set things right. >> he admitted the falsity of it and the intent to deceive. that's different from what director comey told us earlier this year. >> a source close to the matter

told fox news in late spring the fbi director james comey told congress his agents concluded flynn did not knowing mislead them. he was confused and overwhelmed by the chaotic transition. comey posted a bible verse about justice. he is in the process of selling his house to playback legal bills. he decided to cut a deal to avoid several more years of crippling litigation. >> bret: thank you. with the flynn plea deal, the man described as president trump's favorite general could turn against him. chief white house correspondent john roberts has the latest. >> the white house turning against michael flynn. the white house doing its best to diminish michael flynn's role here.

he was the national security advisor for just 25 days. also he was a former official in the obama administration. today's guilty plea moves the mueller investigation from the trump campaign to right inside the gates of the white house. >> [shouting] >> the white house took a nothing to see here approach to michael flynn's guilty plea today. attorney ty cobb said nothing implicates anyone other than mr. flynn. flynn was charged with the same thing that got him fired earlier this year saying: the charging documents reveal more people knew what flynn was up to in conversation with russian ambassador kislyak than the white house admitted. according to the information, on december 29th, flynn called a

member of the trump transition team to discuss what if anything he should communicate to russian about sanctions. a source with knowledge of the investigation, identifies that official as flynn's official macfarland. flynn called back to report on the substance of his call. russian president vladimir putin said he would not take action against the sanctions. that prompted trump to tweet. that information was never passed to mike pence, who on fox news sunday 17 days sunday denied any knowledge of flynn's conversations. >> did michael flynn discuss lifting sanctions? >> i talked to michael flynn yesterday and the conversations

that took place at that time were not in any way relateed to new u.s. sanctions against russia. >> a month after that president trump denied he had anything to do with the call. >> did you direct michael flynn to discuss sanctions with the russian ambassador? >> no, i did not. excuse me. i fired him because of what he said to mike pence. very simple. mike what you doing his job. he was calling countries and his counter parts. it would have been okay with me if he did it. i would have directed him to do it if i thought he was not doing it. >> now that michael flynn is cooperating with special counsel robert mueller, what else there might be out there. a source tells fox news that the white house is absolutely confident that there is nothing else will come to light that they don't know about. what they know about shows no evidence of wrongdoing in terms of collusion with russia.

bret. >> bret: john roberts. thanks. let's get analysis from chris wallace, anchor of fox news sunday at the reagan library. we can't emphasize what we don't know yet. as john pointed out, that's the ominous thing for the administration. >> yes, there are other things that are ominous. we believed that michael flynn was in jeopardy on a variety of issues including money he got from the russia he did not report and from the turkish government he didn't report. those did not appear. it seems that robert mueller, the special counsel, went easy on michael flynn. question, why? maybe he thinks michael flynn has good information and he has a promise of cooperation from michael flynn. another point you have to emphasize, you can't over-state how important michael flynn was

in the early days throughout the campaign with a lot of more senior, respected foreign policy advisors working a deal with ronald reagan. michael flynn was his right hand man on foreign policy. if there is anything between the president and the russians and we don't know there is, michael flynn could be the key figure. >> and the thing about the pre-election. after he gets elected. now there is all of this talk about whether jared kushner may have told michael flynn to reach out to the russians and others about this vote in the u.n. security council. this would not be criminal for them to reach out other than the logan act. >> the logan act was passed when this was a young union and there

was concern about founding fathers wanting to conduct their own foreign policy with governments around the world. the logan act has never been enforced. it would be bad form when you have one president for the president-elect and his people underneath him to go talking to other governments. but the idea that you will be process -- prosecuted very unlikely. so why did michael flynn lie? he admitted he lied to the fbi. >> do you think this will take a long time? >> we don't know. you have paul manafort and michael flynn 2 key players in the trump campaign. one was the top foreign policy advisor and one was the campaign chairman. one pled guilty and the other is fighting an indictment. we are right up to the gates of the president and his family. >> bret: fox news sunday with a

special guest. >> we will be talking to the national security advisor and as somebody who covered ronald reagan, his secretary of state george schultz on the art of the deal. the president knows the art of the deal and so did schultz. >> bret: documents indicate the fbi staged a frenzied scramble to find the source of the leak about last year's air force tarmac lead with bill clinton and loretta lynch. judicial watch say there is is no documentation showing concern over the meeting itself which became an issue in the presidential campaign. the other big story right now. the senate could vote on the landmark tax reform legislation in a few hours. you are looking live at the senator on the floor. keeping watch tonight at the

capitol, mike. >> mitch mcconnell will layout tax reform. gop leaders say they have the votes to pass tax reform. the one no vote we expect is from the tennessee senator joe cokerer who -- corker who has concerns about the debate. >> i am probably a dinosaur. >> another republican hold out announced he is a yes. first thing this morning on fox. >> this is a historic moment for our nation. it's been 31 years since we had comprehensive tax cuts. these moments come along but once in a generation. >> changes to the senate bell to roundup the final votes are

keeping the alternative minimum tax, and allowing property tax deductions and keeping the medical expense deduction. >> i believe it's a good tax bill. there are always short comings in any legislation. i believe it will be help the economy and help the working people. most people will benefit from it. >> last night some republicans demanded adjustments. today democrats accused the gop of rushing it through. >> the fact we received the dynamic score only a day before a final vote on the bill shows just how foolhardy it to rush a bill like this through. >> others are worried about the tax reform package repealing obamacare's individual mandate.

>> if republicans are serious about not undermining family health care. step back from the brink right now. >> with senate gop leadership signaling it has the vote. the house will vote to go to congress to iron out the differences. >> we were supposed to come in next week tuesday through friday. we will come back in on monday. we believe the senate will get this done today. >> a senior administration official predict the senate could wrap up in the next 4 hours. timing on capitol hill is not always precise. >> bret: mike live on the hill. thank you. in the senate majority takes to the floor we will go there live. the stock market and reaction to today's news. it was down and then up at the end. fox business network liz clayman is in new york. why when this guilty plea from michael flynn was reported before the bell did the markets up and had a meltdown at 11:30?

>> it was truly fascinating to watch. yes the markets opened. everybody already digested this news. that michael flynn pled guilty. it was only until that moment that abc news put out the flash just before noon eastern time that perhaps it would be michael flynn who would testify against president trump that the markets took that very poorly. the dow industrial average tanked from its highs. a 401 point swing. the most volatile day of the year. we went to a low of down 350 points. but then we started to climb right back as soon as that news was digested. a resilient market. washington's influence can't be under stated on the michael flynn side and then the senate. as soon as we heard that the senators who had earlier pumped the brakes on the deal had

turned to yeses from nos. the market started to recover. it was an incredible claw back. closer to the flat line. we saw red on the screen for the day. we should not just focus on the dow. the nasdaq fell more than 100 points. the baby was thrown out with the bath water. tech stocks had nothing to do with either issue. we climbed back. we watched oil closely. something happened late yesterday here. it would be that opec's meeting came with an output cut. they held that the output cuts they will extend them all the way to next year. the end of 2018 to limit supply. supply goes down and demand and prices go up. oil was up 1.7%. in the end with all of the drama, the dow had its best week of 2017.

incredible. >> bret: amazing to watch. liz, thank you. secretary of state rex tillerson says reports that the president and his white house are trying to get rid of him are laughable. sources in and out of the administration said yesterday tillerson will be out of a job sometime early next year. however, president trump took to twitter today to back up his secretary of state. tweeting: the longest serving member of the house sent out lawyers to address calls for him to resign among sexual harassment and a secret slush fund to payout sexual harassment accusers. that's next when we continue

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>> ♪ >> ♪ >> bret: this is a fantastic space here in the reagan library. that's a look inside the reagan library. marine 1 and air force 1 used for president reagan here at the library. a back drop for fox news sunday. welcome back. an illegal immigrant found not guilty in the shooting death of a san francisco woman may not be out of the league woods yet. claudia tells us why. >> acquitted of murder and

assault, illegal immigrant and 7 time felon jose garcia zarate may be in criminal court again. >> we are looking at pursuing federal charges. >> condemnationast -- condemnation of the verdict was swift including trump saying. the jury never heard about zarate's immigration and criminal history and decided kate steinle's death by a ricochet bullet was an accident. >> they should not interpret this verdict as diminishing their loss. we have 40 or 50 accidental shootings every day.

this is a tragedy. >> in san francisco where local law enforcement refuseed to cooperate with federal immigration authorities, the fact remains if zarate was deported as planned, steinle would still be alive. the trump administration vowing it won't stop until stricter immigration laws are on the books. the no sanctuary for criminal act tells our sanctuary cities you are not getting federal funding. >> jose zarate is behind bars in the san francisco county jail. he was convicted on a gun charge and will be sentenced next month. possibly up to 3 years but with credit for time served, he won't be here much longer. late this afternoon the department of justice unsealed an arrest warrant for zarate which means he will be turned over to federal authorities and possibly face more prison time. >> bre >> bret: thanks.

michigan democratic congressman john conyers is not going quietly. he said nancy pelosi would not decide his resignation. he is standing firm in the wake of sexual harassment allegations and new details on the house fund to payout accusers. >> he will defend himself until the cows come from. >> a denial from the man representi representi representing john conyers. >> his health is not the best. we will announce whether he will continue or step aside. >> he attacked the credibility of one accuser. 3 former staffers accused conyers of sexual harassment.

the 88-year-old denied all of it but admited to paying off brown an accuser with $27,000 from the office's budget. he is not the only one on capitol hill to settle allegations of misconduct. $84,000 taxpayer dollars were used to settle claims against a sitting member of congress. the texas republican. >> hello. >> $100,000 went to 2 young male staffers who accused a former representative of sexual harassment. a new york democrat resigned in 2010. the house ethices committee sent a letter to the office of compliance asking them to provide all records related to sexual harassment and retalation. congress are trying to make all of the payouts public and ban them in the future.

what about the lawmakers facing allegations for things that happened out of the office. >> no one asked al franken to step down. there are photos and admission. >> new information from the committee on house administration. they released statistics related to this secret slush fund. it's paid out over $359,000 to settle violations of congressional rules. they say one claim settled for $84,000 included allegations of sexual harassment. the biggest payout was for veteran discrimination and retaliation. >> thank you. up next. america's warning to north korea about its nuclear efforts seems

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following the launch of an icbm by north korea for the first time capable of targeting all of the u.s. mainland. kim jong-un. >> we completed our national nuclear force and turned us into a country with powerful rockets. >> south korea officials say the new icbm is not foolproof. >> additional verification is needed on war head condition. >> experts say the missile would only need 2 or 3 more trials to be combat ready. north is getting ready for more. fox news obtained satellite photography to indicate they are building another launchpad. prompting the u.s. ambassador to the u.n. to make this warning.

>> in war comes north korea will be utterly destroyed. . >> that prompted this from russia. >> if someone would like to show his muscles and annihilate north korea, we will do everything to resolve the problem in a peaceful way. >> [sirens wailing]. >> hawaii tested attack warning sirens like this today. it will be repeated every month. an exercise not done since the cold war error. the north korea missile could carry a nuclear pay load of 1500 pounds more than enough to do a lot of damage anywhere in the united states. >> bret: greg, thank you. we told you earlier, we're coming to you the ronald reagan presidential library in simi valley. this weekend they have an impressionive line-up of

speakers. you often come to this thing. one of the speakers, mcmaster the national security advisor. i will ask him questions. he is delivering remarks. what about his message? >> this is my 4th reagan defense forum. it always brings together top leaders from the pentagon and the defense industry times. what he will address is the national security strategy which is required by congress. how to secure america and bring peace through strength. and how to expand the economy overseas and rebuild the military. that's a big theme here tomorrow. the white house ordered a review of nuclear and cyber tragedy. that will be part of the discussion tomorrow. >> bret: a broad national

security strategy. have you done amazing reporting on military readiyness and the crisis in a number of the brancheses. that's a theme here? >> absolutely. max thornbury put it to me this way. >> it's a crisis when we have an increasing number of accidents, some of which unfortunately take the lives of our military personnel. >> a year and a half ago we were the first to report that marine aviiators had to cannibalize parts in the bone yard, the scrap heap in the desert in arizona. right now the air force is 2,000 pilots short. the army 5 out of the 58

brigades are ready to fight tonight. this is the same military being asked to prepare for possible military action in north korea. they are being stretched. >> bret: great to see. you. gorgeous setting. programming notes for saturday. i will interview mcmaster. that will air on fox news channel around 4 p.m. eastern and 1 p.m. in california. he will have the remarks at the beginning. i will host a personal later with the former and current cia directors. 6:30 p.m. eastern and 3:30 pacific. coming up the major developments in the russian collusion case with michael flynn pleading guilty and tax reform and winners and losers. it's friday. "special report" continues from

the reagan library in simi valley after the break.

it doesn't pay to cheat. a defeat device was found on millions of cars. so what happened? tonight correspondent reports on whatever happened to volkswagen? >> 11 million volkswagen diesel vehicles worldwide, the car company added a sheet to make the cars appear more environmentally friendly.

the deception came crashing down. it defrauded consumers with its cars. with a 14.7-billion dollars settlement in 2016, the department attorney general called it one of the most flagrant violations of our country's environmental laws. volkswagen turned over half a million american drivers into unwitting accomplices. >> it's so slowly coming back. >> it will be better than was feared. >> there will be buy back programs and cash payments to customers. >> they paid me $500 to drive it for 2 years. >> the dealer had to figure out

how to keep affected customers happy. volkswagen worked out details. volkswagen said it took hundreds of thousands of vehicles off the road in last year alone. the company said volkswagen is in the middle of the biggest transformation in our country to build a stronger and more transparent culture. part came with the resignation of the ceo and criminal charges. >> consumers focussed on one thing and that's monthly payment. >> this as good of a case as making lemonade out of lemons. it's expensive lemonade but it tastes good. >> volkswagen shows a year to date increase of more than 8%. it's natural to see a bump after

a decline in sales. >> thank you. next up. the personal joins me from washington on the flynn plea, tax cuts and winners and losers. another day of work. why do you do it? it's not just a pay check, you actually like what you do. even love it. and today, you can do things you never could before. ♪ ♪ you're developing ai applications on the cloud. finding insights hidden in decades of medical documents. and securing millions of iot sensors. so get back to it. and do the best work of your life. ♪ ♪

>> ♪ >> ♪ >> [shouting] >> he entered into this agreement for a handful of reasons. he was broken financially. he was broken emotionally. >> bret: when asked what he should say to kislyak did

sanctions, did the president know about it or somebody else? >> i don't think the president is in trouble on. this is something general flynn did that he should not have done. it's not the action that he did. he did not talk about can completely and truthfully to the fbi. >> we are repeating the horrors ever watergate and the shredding of our constitution and common sense and decency. >> michael flynn pled guilty to today to one count of lying to the fbi and agreeing to cooperate with special counsel robert mueller. putting out a statement today:

ty cobb the president's lawyer put out a statement today: we bring in our personal from washington. jonathan swan reporter. matthew editor and chief of the washington free beacon. and julie pace washington bureau chief for the associated press. john, your thoughts? >> telling in several ways. one is that by all accounts, mueller has treated flynn

gently. the question is: what deal has been done? what does he believe he can get in return for the information? from conversations with peopleed in the white house, the level of concern about this is of a completely different character than we saw with the indictments of manafort and gates. there was an expectation about manafort and gates. this is an uncertainty about flynn. one source said this is a desperate man financially and in terms of his personal situation. they don't know who me will unload on. his lawyers stopped cooperating with the president. there is genuine anxiety i was not registering with manafort and gates. >> bret: the court filing suggests what they are talking about here is after donald trump wins the presidency and they are in transition. you asked a question that has been played again and again. we will play it here about the

connections to the russians during the campaign. >> can you say whether you are aware that any one who advised your campaign had contacts with russia during the course of the election? >> i told you general flynn was dealing. that's one person. he was dealing -- >> during the election? >> nobody they know of. >> you are not aware of any contact? >> how many times do i have to answer this question. russia is a ruse. i know you have to get up and ask that question. russia is a ruse. i have not made a phone call to russia in years. >> bret: that's an important distinction we make. what we know from the files, right, julie? >> absolutely. what is notable about the filing we are talking about time during the transition and the opening weeks of the trump administration. not during the election.

much of the mueller investigation has been focussed on what happened during the elections, the potential there was coordination by the russians with the trump campaign to help trump win. what we have seen happen with the mueller investigation, it has tentacles everywhere. why there is uncertainty about michael flynn. he fills all three buckets. involved with trump during the election and during the transition and for 25 days during the actual administration. he has seen quite a bit involving quite a different number of people. what have keen today there is no proof yet that trini donald trus aware of these conversations that people were having with russian officials, other people in his orbit were and that's a significant development. >> the irony of all of this is

with james comey according to some of the reporting who informed congress that the fbi did not feel it had enough to charge flynn when the fbi was in charge of the investigation. it was donald trump's decision to fire comey that ended up launching this special counsel investigation, which is now filed this plea agreement with flynn. as part of we are in the second act of a three act play that will probably end up in the white house. >> bret: the capitol hill reaction to all of this starts with trey who mentioned about comey. >> by pleading he admitted the falsity of it and the intent to deceive. that's different from what director comey told us. >> i don't see this going any further. i have seen no evidence there is any connection between general and the president involving russian collusion. >> we have a number of major

figures like donald trump jr. and jared kushner. how many more figures have to be brought to justice because of their ties with russia before we end up connecting all of these dots. >> bret: i want to turn to taxes, but there was talk this could be wrapped up soon. it doesn't feel like that tonight. >> there was no basis for this. ty cobb was just asserting this internally. he is one of the lawyers defending the president. his argument is the strategy has to be open. we have nothing to hide. tell them everything and we will wrap this up before thanksgiving or before the end of the year. no sign this is wrapping up before the end of the year. the nature of what we saw today with flynn suggests there is a cooperation going on. we don't be where this is headed next. i would be stunned if this is wrapped up by christmas.

>> bret: senate majority leader mitch mcconnell expected on the senate floor sometime. won't happen within this hour. listen to the battle on the senate floor for tax reform. >> tax reform, tax relief for low and middle income families in this bill and the pro-growth policies are too important to allow a minority to kill it by filibuster. >> it's astonishing how far my republican colleagues are willing to run from the truth to jam this terrible tax bill through congress. >> i would love for us to take the time to sit down and work on this and see. you would be surprised. not only could we get to 60. we could get to above 60. >> bret: they will get it together, julie? >> [laughing] i don't know if they will get 60. i think they will get it together today. they have been working really hard behind-the-scenes. a struggle for republicans to get the votes they needed to get their version of the bill

through. it looks like they have that. bob corker is the only hard no vote here. it looks like this will be a big victory for republicans and for the president. >> bret: i need a super lightning. winners and losers. here we go? >> my winner is mike pompeo being talked about to replace rex tillerson as secretary of state. he is loved not only in the white house but also at the stated. state department. loser is al franken who is mishandling the accusations of sexual harassment. now he has a new enemy with john conyers facing similar me misconduct. >> my winner is tom cotton. whether he replays pompeo at the cia or not is a rising force in republican foreign policies circles. my loser is joe barton.

>> all right. >> bret: why would you do that? >> [laughing]. >> don't google it. my winner is the pro-israel community. donald trump next wednesday will recognize jerusalem as israel's capital. that's a huge deal and will have ramifications for the peace process. my loser is matt lauer. the creepest device ever used in any sexual harassment case, a button under the desk to lock the door. creepy. >> bret: what a week. thanks from washington. when we come back, notable quotes. but prevagen helps your brain with an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. the name to remember.

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>> bret: finally to make him a notable quotable's. >> he's an icon in our country. >> i am embarrassed. >> conyers should resign.

>> washington isn't a swamp, it's a sewer and i think people need to flush it. >> we are repeating the horrors of watergate. >> you can get sued for showing up for work. >> i assume you're the young one in the group, they call her pocahontas. >> re-tweeting from britain first was the wrong thing to do. >> the president tweeted a blatantly accurate statement. speak out we are far apart. >> was because he hates you? >> a missile was launched from north korea. >> if the republicans get their magical unicorn mathematics about growth. >> sink about sitting there with a rubik's crew. >> it goes through this beautiful committee.

we mix it up and we stir it up. >> it's never fun. [laughs] >> bret: what a week. thanks to the reagan library. that's it for this special report. fair, balanced, and unafraid. getting ready for the national defense forum here. melissa francis takes over for martha tonight. melissa, another busy news busy news day. >> melissa: absolutely. we pick up the story from here. we begin with breaking news and that kate stanley murder. the department of justice now saying at both support this before or california jury failed to convict him on charges. good evening, i melissa francis into an for martha maccallum. you saw the verdict arrive here on the story last night. a seven-time felon and illegal