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Building a Cabinet; Defense Secretary Nominee; Democrats in Disarray; Looking for DNC Leadership; Obama's Secret Deal with Australia;

SPECIAL-REPORT-WI-01

REPORT-WI-01

Disarray; Looking for DNC Leadership; Obama's Secret Deal with Australia;

What is Presidential?; Debt Clock Tolls for Thee; Crisis in Aleppo; Refugee

Crisis in Syria Examined; President Obama Agrees to Take Refugees from

Australia; Donald Trump Hold Rally - Part 1>

Kevin Corke, James Rosen, Rich Edson, John Huddy, Amy Kellogg>

East; World Affairs; Government; Politics>

BRET BAIER, FOX NEWS CHIEF POLITICAL ANCHOR: New indications about the President-Elect's possible pick for secretary of state; new controversy about a call with a world leader; and a new take on presidential speech making.

This is SPECIAL REPORT.

Good evening. Welcome to Washington. I'm Bret Baier.

A cavalcade of candidates filed into Trump Tower again today with a few surprises there. The President-Elect is slowly filling in the blanks on the list of his key advisers. We also maybe getting a better indication of how Donald Trump plans to present himself as president. And we are seeing and hearing just how bitter the defeat remains for some in Hillary Clinton's campaign.

Correspondent Peter Doocy is live outside Trump Tower again tonight. Good evening -- Peter.

PETER DOOCY, FOX NEWS CORRESPONDENT: Good evening -- Bret. And a big surprise late this afternoon, early this evening came when Governor Chris Christie popped out of Trump Tower's elevator unannounced. Christie's visit here comes as his name is floated as a possible next RNC chairman. But the big work of the day here in midtown at Trump Tower was filling key cabinet slots.

(BEGIN VIDEOTAPE)

DOOCY: Another name from the secretary of state short list was on the Trump Tower guest list today, former U.S. Ambassador to the U.N. and Fox News contributor John Bolton; his first meeting with the President-Elect about the possibility of becoming America's top diplomat.

Today we also heard for the first time what it is that Mr. Trump now likes about another contender for the job in Foggy Bottom, Mitt Romney.

DONALD TRUMP (R), U.S. PRESIDENT-ELECT: Well, he has been very gracious. And don't forget I hit Mitt pretty hard also. I mean before the fact -- and so I understand how it all works.

But he has been very, very nice. We had dinner the other night. It was great. There was actually good chemistry. It was really good chemistry with him.

DOOCY: Mr. Trump says an announcement will come soon. And that may have his senior staff on their toes because some of them say the mention of a General James Mattis nomination last night in Ohio --

TRUMP: He is the closest thing to General George Patton that we have and it's about time.

DOOCY: -- was a complete surprise.

KELLYANNE CONWAY, TRUMP SENIOR ADVISER: We did not have a clue that he would do that at that moment. I didn't, anyway. But that's ok.

DOOCY: Vice President-Elect Mike Pence is telling the "Wall Street Journal" the Trump administration plans to aggressively pursue big ticket campaign promises with a focus on healthcare and immigration saying, that quote, "I think the only thing that will surprise them is that Washington, D.C. is going to get an awful lot done in a short period of time." And part of the transition process is figuring out how.

That's why Republican Senator David Perdue from Georgia came to New York today.

SEN. DAVID PERDUE (R), GEORGIA: I committed my position in the Senate to full support about getting this 100-day plan executed.

DOOCY: Other guests included former defense secretary Robert Gates, Florida attorney general Pam Bondi and North Dakota Senator Heidi Heitkamp who joins Congresswoman Tulsi Gabbard as the only elected Democrat to meet with the incoming president and who is the only elected official we have seen sharing an elevator car with famous New York street performer The Naked Cowboy.

The transition in New York has been completely civil. But when Trump and Clinton staff met for a conversation in Cambridge, Massachusetts there was chaos.

JEN PALMIERI, CLINTON CAMPAIGN COMMUNICATIONS DIRECTOR: I would rather lose than win the way you guys did.

CONWAY: No, you wouldn't.

PALMIERI: Yes.

DOOCY: A forum held every four years at Harvard's Institute of Politics between winning and losing political operatives soured last night when Clinton communication director Jennifer Palmieri accused Trump campaign manager Kellyanne Conway of catering to white supremacists because she works in the same office as the polarizing former Breitbart CEO Steve Bannon. And Conway fought back.

CONWAY: Do you think I ran a campaign where white supremacists had a platform? Are you going to look me in the face and tell me that?

PALMIERI: It did. Kellyanne, it did.

CONWAY: Really. And that's how you lost?

(END VIDEOTAPE)

DOOCY: Fresh off the big job saving Carrier announcement, the President- Elect told us today that he is going to start relying on a forum of CEOs to advice him while he tries to bring jobs back to the United States from companies like Disney, Wal-Mart and GE -- Bret.

BAIER: Peter, every day or so we get a new list of world leaders President-Elect Trump has talked to. But today, in particular, one particular call is raising some eyebrows here in Washington and probably in another world capital.

DOOCY: Right. And that's because the President-Elect spoke on the phone, we learned just a few minutes ago, with the President of Taiwan. It's the first time in nearly four decades that an American president or President- Elect has spoken to a president of Taiwan because we haven't had diplomatic relations with them in that entire time.

The transition office says that two spoke about the close economic, political and security ties between the U.S. and Taiwan. But this is possibly going to start causing some problems with China, which disagrees very strongly with Taiwan about their status as a province.

We don't know if there's going to be a new China policy already, if this is a hint of what it is. But remember China was a major target of Mr. Trump on the campaign trail, especially when he talked about global economic problems he thinks are caused by their manipulation of currency -- Bret.

BAIER: That's one to watch. And just to be clear, the Naked Cowboy is not under consideration for a position.

DOOCY: They are tight lipped about his status as a possible cabinet member -- Bret.

BAIER: I had to clarify that. Peter -- thank you.

Wisconsin's recount of presidential votes is in its second day. Trump supporters filed a lawsuit to halt the recount claiming it is unconstitutional. One of the state's 72 counties has already completed the count in that county with Hillary Clinton gaining a single vote on Donald Trump -- one. Late this afternoon, a judge rejected Trump's request to stop the recount but it allowed a lawsuit to proceed.

In Michigan, the elections board deadlocked on Trump's request to prevent a recount there. So it will start next week unless the courts intervene.

And in Pennsylvania, a hearing on whether to begin a recount is scheduled for Monday.

The reviews are coming in for President-Elect Trump's selection of retired Marine Corps General James Mattis as his defense secretary. Plus, if confirmed the challenges Mattis faces managing the massive bureaucracy at the Pentagon.

National security correspondent Jennifer Griffin has that story tonight.

(BEGIN VIDEOTAPE)

JENNIFER GRIFFIN, FOX NEWS NATIONAL SECURITY CORRESPONDENT: When asked what he thought of General James Mattis, Donald Trump's pick to head the Pentagon former defense secretary Robert Gates gave a thumbs-up as he boarded the elevator in Trump Tower to see the President-Elect.

TRUMP: We are going to appoint "Mad Dog" Mattis as our secretary of defense.

GRIFFIN: The top U.S. Commander in Afghanistan, an army four star, welcomed the choice.

UNIDENTIFIED MALE: He is a soldier's soldier, a marine's marine. I'm sure that's what he would say.

GRIFFIN: Lieutenant Colonel Joe Plenzler served under Mattis during the invasion of Iraq and knows first hand the unwieldy Pentagon bureaucracy Mattis will face.

LT. COL. JOE PLENZLER, U.S. MARINE CORPS: I think his biggest challenge will be inertia. People get set in their ways. Most people don't like change. And the two times I served with him, when he goes to a unit, that's what he brings about is change and positive change.

GRIFFIN: Like a CEO who runs a large company, most agree Mattis will need a good chief operating officer as his deputy.

LT. COL. RALPH PETERS, U.S. ARMY: I think the best choice for General Mattis for a number two would be a technocrat, someone who is really good with the intricacies of the defense budget.

GRIFFIN: Former defense secretary Donald Rumsfeld was a former navy pilot but also ran two Fortune 500 companies. Former defense secretary Robert McMamara was the President of Ford Motor Company. Some say what General Mattis brings after 15 years of war is more important -- a boost to morale.

PETERS: General Mattis while far from a war monger will return them to a focus on war fighting and a sense of battlefield and strategic reality. And that's really what has been missing.

GRIFFIN: In 1947, lawmakers wanted a civilian in charge of the Pentagon when they established the Defense Department fearing military rule after World War II. At least one Democratic senator Kirsten Gillibrand of New York says she will oppose General Mattis' nomination because she believes in civilian rule of the military. The House Armed Services chair says he doesn't think a waiver will be difficult.

SEN. MAC THORNBERRY (R), TEXAS: We occasionally make exceptions. We made an exception for General Marshall back in the Truman days. And I think General Mattis is that sort of situation where an exception is warranted.

(END VIDEOTAPE)

GRIFFIN: Tonight, Defense Secretary Ash Carter issued the following statement. Quote, "I have known General Jim Mattis for many years and hold him in the highest guard. I will continue to do everything I can to help ensure a seamless transition at the Department of Defense -- Bret.

BAIER: Jen -- some breaking news tonight about the case of Sergeant Bowe Bergdahl.

GRIFFIN: In fact, Bret, Fox News has learned that Army Sergeant Bowe Bergdahl, who was held captive by the Taliban for five years after walking off his base in Afghanistan, has requested a pardon from President Obama. Neither the army nor the Pentagon knew details about the letter because it was sent not through the military chain of command.

According to two well placed sources, Bergdahl wrote a letter to the President requesting a pardon and thanking him for rescuing him. The letter was sent via the Department of Justice. Last month Bergdahl's court-martial trial was delayed for a second time and is now slated to begin May 15 at Fort Bragg, North Carolina -- Bret.

BAIER: Jennifer Griffin, live at the Pentagon. Jennifer -- thank you.

Democrats are having a hard time coming together in the wake of Donald Trump's stunning victory last month. We have Fox team coverage of that tonight. Ed Henry tells us why the supposed front runner to become the new party leader is running into some problems. But we begin with senior political correspondent Mike Emanuel on Capitol Hill with the Democratic division on how to deal with the Trump presidency.

Good evening -- Mike.

MIKE EMANUEL, FOX NEWS CHIEF CONGRESSIONAL CORRESPONDENT: Bret -- good evening.

Democrats expected Hillary Clinton to be the 45th president and their leader. Her loss has left the party doing some soul searching and bracing for a new political reality of Republicans in charge.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: If they're going to put in poison pills, you can be sure we're going to fight them every step of the way.

EMANUEL: A former Obama administration czar admits Democrats are deeply divided after President-Elect Trump's victory.

VAN JONES, CNN POLITICAL COMMENTATOR: That's a split in our party.

Every meeting right now, and I've been in most of them or called in among the progressives is, should it be obstruction, war to the knife, stop this guy everywhere or should there be a more constructive opposition and try to help the country?

EMANUEL: With no obvious base of the party liberal Senators Bernie Sanders and Elizabeth Warren are trying to fight a new president with Warren noting the popular vote in this election.

SEN. ELIZABETH WARREN (D), MASSACHUSETTS: The American people didn't give Democrats majority support. So we can come back to Washington and play dead. They didn't send us here to whimper, whine or grovel.

EMANUEL: A boisterous opposition would not be unique to the Democrats. Early on in President Obama's first term, Senate Republican leader, Mitch McConnell led his own resistance to Mr. Obama hoping to defeat him after four years.

SEN. MITCH MCCONNELL (R-KY), MAJORITY LEADER: Over the past weeks, some have said it was indelicate of me to suggest that our top political priority over the next two years should be to deny President Obama a second term.

EMANUEL: Then there's Chuck Schumer's approach who has to lead Democrats in the senate with 25 of his members on the ballot in 2018. Schumer says he can work with a fellow New Yorker.

SEN. CHUCK SCHUMER (D), NEW YORK: The silver lining in the deep clouds of this election is that on many economic issues, President-Elect Trump in his campaign was closer to us than to Republican leadership, which always seems to wind up in the corner of the special interests.

EMANUEL: And the President-Elect tweeted nice things about him. "I have always had a good relationship with Chuck Schumer. He is far smarter than Harry Reid and has the ability to get things done. Good news."

But now Democrats are about to become the party out of power.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: Our unity is very important. So we will be strategic. We will be unified. And we will be unwavering in our support of America's working families.

(END VIDEOTAPE)

EMANUEL: That may be a lot easier said than done. Many lawmakers say it's incredibly frustrating being the minority party, especially when the other party is in the White House as well -- Bret.

BAIER: Mike Emanuel, live on the Hill tonight. Mike -- thanks.

It appears the path of Minnesota Congressman Keith Ellison to the top of the Democratic Party ranks will not go as smoothly as many believed.

Tonight chief national correspondent Ed Henry tells us how Ellison's past may be catching up with him.

(BEGIN VIDEOTAPE)

ED HENRY, FOX NEWS CHIEF NATIONAL CORRESPONDENT: When President-Elect Donald Trump appointed Steve Bannon to a top White House post, there was a full court press from the media to get Republicans like Mitch McConnell to support or condemn Bannon for his ties to the alt right movement.

MCCONNELL: I'm not going to comment on White House personnel choices.

HENRY: And incoming Senate Democratic leader, Chuck Schumer teed off on Bannon.

SCHUMER: The things he said are reprehensible. And I just -- we're going to keep a really careful eye on the President and on him.

HENRY: Yet six days earlier, Schumer endorsed Minnesota Congressman Keith Ellison to chair the Democratic National Committee. Ellison, the first Muslim American elected to Congress, has also gotten the backing of liberal Senators Bernie Sanders and Elizabeth Warren. Even though Ellison wrote columns in law school defending Nation of Islam founder's Louis Farrakhan's anti-Semitism.

And now an audiotape from 2010 has surfaced in which Ellison declares Israel is running American foreign policy.

REP. KEITH ELLISON (D), MINNESOTA: The United States foreign policy in the Middle East is governed by what is good or bad through a country of seven million people.

HENRY: While the Anti-Defamation League initially took a balanced view of his Ellison's DNC candidacy, saying it appreciated his contrition about past statements, but had concerns about his commitment to Israel's security.

After the tape surfaced the ADL they blistered him Thursday. Quote, "Rep. Ellison's remarks are both deeply disturbing and disqualifying. His words raise the specter of age-old stereotypes about Jewish control of our government."

Top Democrats say Ellison has matured in recent years.

REP. JAMES CLYBURN (D), SOUTH CAROLINA: So he has apologized, if my memory serves, or he says he regrets some of those things. And all of us wish we had not said some things that we have said.

HENRY: Schumer has faced pressure from Jewish leaders in New York to back off Ellison. But today, he put out a statement saying, "I stand by Rep. Ellison for DNC chair. We have discussed his views on Israel at length. And while I disagree with some of his past positions, I saw him orchestrate one of the most pro-Israel platforms in decades."

(END VIDEOTAPE)

HENRY: Now, they are rallying around Ellison partly because nobody else is running. The only other person mulling it, former DNC chair Howard Dean, unexpectedly took himself out today. Meanwhile Ellison aides say the congressman rejects anti-Semitism -- Bret.

BAIER: The move is interesting.

HENRY: Surprising.

BAIER: Ed -- thank you.

There are new questions tonight about whether President Obama's secret deal with Australia to take in thousands of refugees that that country does not want will survive in the new Trump administration.

Correspondent Kevin Corke is at the White House again tonight looking into the possibilities. Good evening -- Kevin.

KEVIN CORKE, FOX NEWS CORRESPONDENT: Good evening to you -- Bret.

2,465 -- that's the number of refugees already rejected by Australia that could be headed to the U.S. That's what the Obama administration wants and that's what will happen if the President gets his way.

In an unprecedented move, the State Department classified details of those refugees to be resettled here in the states, thanks to a secret deal that you pointed out with Australia. Experts say the nearly 2,500 refugees would come from countries Iran, Iraq, Afghanistan and they're mostly male.

Congressional lawmakers fired off a letter to Secretary of State John Kerry looking for answers, questioning the secrecy of the deal and the rush to bring them here when they were already offered asylum in Cambodia and elsewhere.

President-Elect Donald Trump, who has been a vocal critic of the administration's refugee policy, talked about this very subject last night during his thank you rally in Ohio.

(BEGIN VIDEO CLIP)

TRUMP: Just so you understand, people are pouring in from regions of the Middle East. We have no idea who they are, where they come from, what they're thinking. We're going to stop that dead cold, flat.

ERIC SCHULTZ, WHITE HOUSE DEPUTY PRESS SECRETARY: We have one president at a time. The commander in chief sets the policies. The President-Elect, Donald Trump, will set the policies once he takes the oath of office.

(END VIDEO CLIP)

CORKE: Schultz of course, said the screening for these refugees, Bret, will be rigorous. But at least one expert told Fox News today there's a reason that Australia rejected them and the U.S. should follow suit.

(BEGIN VIDEO CLIP)

NAYLA RUSH, CENTER FOR IMMIGRATION STUDIES: President Obama is bringing more and more refugees who are going to be -- the problem is that it's beyond comprehension why President Obama wants to bring Australia's unwanted so quickly and under these circumstances.

(END VIDEO CLIP)

CORKE: The State Department, Bret, is saying tonight that they are interested in this circumstance on a humanitarian basis. It remains to be seen if they, of course, will make their way here to the States. We will be watching very carefully.

Back to you.

BAIER: Kevin Corke, live on the north lawn. Kevin -- thank you.

Fox News has learned the Pentagon has transferred another detainee from Guantanamo Bay to a small island nation off the coast of West Africa. The single detainee took off in a U.S., military transport plane from Gitmo late Thursday night and arrived early Friday morning in Cape Verde, located about 300 miles off the coast of Senegal. There are now 59 detainees remaining at Gitmo.

President Obama says he is asking a White House commission on improving the nation's cyber security to brief President-Elect Trump as soon as possible. The commission is calling for an expansion to the $3.1 billion fund the administration has proposed for upgrading government IT systems. The report follows the worst hacking of U.S. government systems in history.

Next week I will be interviewing the commission's vice chair and executive director on this issue.

Up next, the national debt streaks toward the $20 trillion mark with a t.

First here is what some of our Fox affiliates around the country are covering tonight.

Fox 17 in Nashville as the death toll from the wildfires in the southeast rises to 13. Gatlinburg, Tennessee's mayor says 85 people have been injured and a thousand structures have been damaged or destroyed. He says his goal is to reopen the city by next Wednesday.

Fox 8 in New Orleans as investigators look into the apparent road rage incident that left a former NFL player dead. Joe McKnight was killed Thursday afternoon during a confrontation with another motorist. The suspected shooter has been released from custody.

And this is a live look at Miami from our Fox affiliate WSVN. One of the big stories there tonight -- an all clear for another Miami neighborhood battling the Zika virus. Florida's governor says Miami's Little River area has been free of local transmission of the virus for 45 days. That leaves just one Miami Beach neighborhood in the danger zone.

That's tonight's live look outside the Beltway from SPECIAL REPORT. We'll be right back.

(COMMERCIAL BREAK)

BAIER: One need look no further than the way Donald Trump announced his selection of James Mattis as Pentagon chief nominee to see that the President-Elect is not morphing into someone new just because he won the election. So what can we possibly expect from a President Trump?

Here is chief Washington correspondent James Rosen.

(BEGIN VIDEOTAPE)

JAMES ROSEN, FOX NEWS CHIEF WASHINGTON CORRESPONDENT: Chalk up another unconventional first for the President-Elect whose announcement of his nominee for defense secretary at a boisterous public rally was not only a departure from longstanding practice but a surprise to his own staff.

TRUMP: Ok. I gave up a little secret. My people over there are probably saying -- you weren't supposed to do that, Mr. Trump.

CONWAY: This is the way Donald Trump communicates with people. He doesn't need to put out a press release. He doesn't have a press conference.

ROSEN: Even though Barack Obama was a singular president in his heritage, race and overseas upbringing, the 44th president discharged his duties in a classically conventional style, with deference to White House traditions, a certain pinstripe decorum that all post-war presidents have exhibited. Historians call it "wearing the suit".

LARRY SABATO, UNIVERSITY OF VIRGINIA: It's really another way of saying that an individual takes on the mantle of high office and it changes the individual's demeanor and approach and style. And that does, in fact, happen in most cases. But if ever there were an exception, it's going to be Donald Trump.

ROSEN: Indeed from his highly choreographed visits from aspiring cabinet members --

TRUMP: It's about time.

ROSEN: To his release of a video complete with its own text graphics outlining his first 100 days; from his late night tweets to his direct intervention on behalf of a manufacturing plant in Indiana -- this President-Elect has signaled he will do some things, perhaps many things very differently.

TRUMP: They say it's not presidential to call up these massive leaders of business. I think it's very presidential. And if it's not presidential, that's ok. That's ok.

ROSEN: But can the republic survive a president who doesn't act presidential? The question has been percolating for months.

UNIDENTIFIED MALE: When they say Trump needs to act presidential. What's presidential? Don't be emotional? Be evasive? I mean is it presidential to dance on Ellen or to blow a saxophone on Arsenio Hall's show? I mean just exactly is presidential?

(END VIDEOTAPE)

ROSEN: As with his conduct on the campaign trail, Donald Trump's behavior as president, the many different ways in which he might flout convention or uphold tradition from the small, such as whether he always wears a coat and tie in the Oval Office, to the large, such as casually dialing up foreign leaders the U.S. doesn't ordinarily talk to will be a product of the man's own fluid personality, Bret, a blend of the calculated and the improvised.

BAIER: Could be a wild ride. Maybe a new definition of presidential.

ROSEN: Absolutely.

BAIER: James -- thank you.

More mixed jobs news coming out of the Labor Department tonight. Employers added 178,000 jobs in November and the unemployment rate fell to a nine- year low of 4.6 percent.

However much of the decline is being attributed to more people giving up looking for work. The labor participation rate fell again last month to 62.7 percent.

Stocks were mixed today as well. The Dow lost 21.5. The S&P 500 was up one. The Nasdaq gained 4.5. For the week, the Dow increased a tenth of a percentage point. The S&P 500 was off a point. The Nasdaq was down two and two-thirds.

Speaking of money, you and your family are looking at a $20 trillion national debt in coming weeks. That figure has doubled since President Obama took office. So what's next?

Here is correspondent Rich Edson.

(BEGIN VIDEOTAPE)

RICH EDSON, FOX NEWS CORRESPONDENT: Nothing in current law is going to stop the national debt from reaching $20 trillion. The Congressional Budget Office says nothing in law will stop $25 trillion and $30 trillion. At the turn of the century, the federal government owed about $5.5 trillion. Now it owes nearly $20 trillion.

MAYA MACGUINEAS, COMMITTEE FOR RESPONSIBLE FEDERAL BUDGET: The debt is on an unsustainable path. It's the highest it has been for any president entering office other than President Truman. And it's expected to grow faster than the economy every year forever.

EDSON: In September the 2016 fiscal year ended. In that year, the federal government added $590 billion to the national debt. The government took in $3.3 trillion in taxes. It spent $3.9 trillion.

So how did the government spend that money? More than half went to government health care and social security. Healthcare costs more than $1.1 trillion. More than a trillion of that is just Medicare and Medicaid. The government spent more than $900 billion on social security and disability insurance. Defense cost about $580 billion.

And about a trillion dollars on everything else the government does like programs for low income Americans, benefits for retired workers, transportation, research, education, international affairs and housing. And interest on the existing national debt costs nearly $250 billion last year alone.

Budget experts say 2016 campaign promises would drive the debt much higher.

DOUGLAS HOLTZ-EAKIN, FORMER CONGRESSIONAL BUDGET OFFICE CHAIR: The chatter you hear is tax cuts, infrastructure spending, military spending, don't touch social security, don't touch Medicare -- that quite frankly just doesn't add up. Mr. Trump inherited a very big budget problem from President Obama.