thanks so much for watching "strange inheritance." and remember -- you can't take it with you. lou dobbs is next right here on fox business. reporter: a major shakeup at the white house. general john kelly, the homeland security secretary is his replacement. he will officially start monday. two white house sources telling fox that priebus secretly resigned yesterday. the president tweeted i am pleads into form you i just named general john kelly as white house chief of staff.

he is a grate american. i would like to thank reince priebus for his service and dedication to his country. we accomplished a lot together, and i am proud of him. when asked about the move, the president praised both men. >> general kelly has been a star, done an incredible job thus far, and respending by everybody. a great american. reince priebus a good man. thank you very much. reporter: priebus issuing this statement, saying it' it's beene of the greatest honors of my life to serve the president and this country. i will continue to serve as a strong supporter of the president's agenda and policies. i can't think of a better person than general john kelly to succeed me. i wish him god's blessings and

great success. ed rollins who served in three presidential administrations. called the dean. ed, you were just telling me outside the studio, given the week the white house happened, this is a hail mary pass. ed: i feel for priebus. he was a great party chairman. he did the best he could in less than 6 months, it's probably bent longest term anybody has served. i think kelly coming in here settles it down somewhat. it's all about the president. the president respects generals. reporter: why is that? ed: remember he wasn't in the

service himself, but he was in military school. it's definitely respect. i grew up in a navy town full of marines. i wanted to be a marine. i have back injuries. when you get to be a four-star marine. there has been 51 of them in the history of the marine corps. you walk on water. you are an extraordinary school tar fan extraordinary intellect. kelly has take and difficult department in homeland security has been chaotic since it was first formed an has done an extraordinary job in a short period of time. he may not be able to get everything he wants out of the president, but he will get everything he wants out of the staff. reporter: the events of the week with anthony scaramucci followed by the healthcare failing again. overall leaks concerns.

ed: it hasn't run well. i was down there visiting priebus and bannon. as i was sitting in the reception area, it seemed like a chaotic place. a lot of people walking around and talk. it didn't seem to be orderly. i spoke to john bolton who had a similar experience. my sense is it will get back to where it's very structured. up have an extraordinary leader in the chief of staff. and i think they have got to come back in september, labor day and start rolling. >> with all of your experience in these administrations, how does this current white house compare to your experience in the white house? >> i only compared it could days in my own personal experience. one was when richard nixon got thrown out of office. and the other was the day reagan got shot.

this has been a chaotic administration with lots of fights and lots of battles. the president is very unique. but my sense is this is a general as chief of staff who will give him order and structure. he knows how to work the hill. leon panetta was his aid. reporter: we'll continue our conversation with you throughout the hour. the white house condemning north korea's launch of an intercontinental ballistic missile. president trump vowing to take tall necessary step toins sure the security of the american homeland and protect our allies in the region. richedson has our report. >> they have done it again. north korea launches another

intercontinental ballistic missile. traveling 600 miles before falling into the sea of japan. >> we absolutely must through various means deny north korea the capability of having a deliverable nuclear weapon. they do not have it now but they will have sit if we continue to be patient. reporter: north korea's missile and weapons capability. secretary of state rex tillerson spoke with the top national security officials in the government to coordinate a response. each north korean launch prompts the u.s. and its allies to further isolate the regime. south korea's president wants to

deploy anti-ballistic missile programs with the united states. reporter: the latest icbm launch follows iran's satellite being launched into space. the u.s. says the launch violates a united nations security council resolution. >> we are concerned about iran's support for terrorism. we consider those to be provocative actions. a provocative action undermines the security of the region and around the world as well. reporter: the treasury department says state launched vehicles use technologies closely related to those of an intercontinental ballistic

missile and this launch is a threatening step by iran. part of the u.s. strategy to alter their behavior is to convince other country to the isolate them. china is key to that strategy. when asked to review china's performance, a former state department official says the list of things china could be doing far outweighs the list of things they have done. reporter: the other story we are following tonight, the stunning defeat of income the senate. lawmakers are calling for a change in direction. but there hasn't been a major overhaul of the tax coat in 31 years and that was done with bipartisan support. mike emanuel has this report. >> i think we have an opportunity to go forward and do this the trite way. reporter: foxconn firmed senator

lindsey graham met with trump to discuss this proposal that would take the obamacare money and send it back to the states to figure out how to best use their healthcare dollars. >> i'm optimistic we can still get it done. i can tell you who is staying in. the president is staying in on this fight. he's going to deliver. the disappointment of the skinny repeal coming up short. but they, too, are talking about next steps. >> we can break it up in pieces and see what we can do with these parts. >> the senate democratic leader

called for bipartisan cooperation. >> we should sit down and trade ideas. nobody said obamacare is perfect and our healthcare system doesn't need fixing. reporter: debt ceiling increase, national defense authorization act, trump administration nominations and tax reform via 2018 budget reconciliation. on tax reform gop leaders say they are going to make it simpler and fairer for american families. >> getting consensus between the senate and the house on tax reform makes it more of a viable enterprise. i feel much more confident we'll have the landing on tax reform. we have consensus. here is the framework, let's get

it done. >> a reminder as we proceed to tax reform. we need to employ a different model. this can't be done with one party. reporter: the house has left the d.c. swamp and gone to their home districts for a five-week recess. we are coming right back with much more on the breaking news out of the white house. general john kelly the new white house chief of staff. keep it right here. president trump is not giving up after senate leadership fails to deliver on healthcare. >> the president is daying in on this fight. he's going to deliver. he made it clear this morning. reporter: we take up the healthcare fight with fred barnes and the dean, ed rollins. and the president declaring war on the vile, ms-13 gang.

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lori: president trump talking about his administration's efforts to crack down on ms-13 gang. hours before naming him white house chief of staff, the president in a speech to law enforcement officers on long island in new york vowing to destroy the violent ms-13 gang. >> they don't like shooting people because it's too quick. they like to knife them and cut them and let them die slowly. reporter: president trump describing the notoriously violent gang ms-13. it's the policy of this administration to disman, decimate, eradicate ms-13. reporter: it started in the 1980s in los angeles. there is an estimated 10,000 gang members from l.a. to houston to long island.

they are primarily from el salvador. >> they force to you go through some often brutal initiation ceremonies may involve killing somebody to join. reporter: the brutality of ms-13 is on the rise, largely from recruiting from a flood of unaccompanied minors who crossed the bored into the u.s. since january 2016, 17 people have been murdered at the hands of this gang. in april four young men were butchered with a machete and left in a park. last year two girls were slaughters while walking home. since then the police have been on the offensive making 230 ms-13 arrests.

the president is promising more resources to speed up deportations and more customs and immigration enforcement officers. the president said he will stop sanctuary cities. authorities indicted ms-13 members for her murder in march. they are grateful for his support. >> they are attack our children with a no mercy outlook. reporter: the president thanks law enforcement for their efforts. i.c.e. has deported already 1,000 more gang members than last year. lori: joining us to discuss the shakeup at the white house. fred barnes and back with us, the dean, ed rollins. fred, first to you. let me out up by asking you your thoughts on john kelly the new

chief of staff. if you were surprised by the late friday news. fred: i was surprised. but this is the best thing to happen at the white house in across long time. it's like hiring bill belichik to be your football coach. i like him. kelly is exactly what he needs. he has a huge job there. he was such an impressive cabinet member, the most of impressive one, and he diffused the whole immigration issue. the problem at the white house is the way donald trump conducts the presidency. it's not the policies. john kelly is going to have to advise the president to change them. i actually think the president is a little afraid of john kelly. he talks about his generals. and he's a little scared by them. i think kelly will be a

tremendous force for good. lori: you think the president will be intimidated by general kelly and it will result in further organization at the white house and getting back on track with the agenda. as you know, healthcare, spectacularly failed this week. ed: i'm not sure it totally failed. the key thing here is he's -- it's a question of whether the president will treat him as a peer. there are certain people the president treats as peers. he has proven himself to be an effective cabinet member with an extraordinary career in military. e walks in day one with a different environment. you have capable people in the white house but they haven't been able to function because of infighting.

there will be no more infighting. it will stop. lori: some are concerned the gop establishment has been moved out with sean spicer's resignation a week ago. fred: reince priebus did a job as good as he could. but the republican establishment is what it is. it's who the white house is dealing with on tax reform. and they have to. they are dealing with the committee chairman and paul ryan and mitch mcconnell. lori: they failed on healthcare in this latest round. a lot of people are concerned with the lack of legislative support the president has, it will put tax reform in jeopardy. fred: there are a lot of people looking for reasons to say that republicans can't do anything because they have did fail so

spectacularly at least for now on healthcare. but one thing that has been organized for months has been the gang of six that has come together to run the effort for tax reform. the statement released last night showed that, they agree on what to do. it's a completely different proposition than healthcare and i think it will be successful. lori: ed, all sorts of geopolitical threats out there. now that there is a general running things in the west wing, do you think that will get a better handle on curb these efforts? ed: they see chaos and when they see chaos, after we failed on the healthcare and the white house is in disarray, he fires off a rocket today. i think we'll deal with this problem as effectively as we can and it will and high priority. the key thing on the tax is tax

is something we desperately need to get this economy moving again. healthcare was put together by obama and his team it's a political document. cutting taxes, getting business moving forward, creating capital. it's a positive thing. lori: it hasn't happened in 31 years. ed: the reality is it can happen now and i think it will be a high priority. lori: thank you so much ed and fred. do you believe the white house shakeup will stop the leaks? a remind tore follow louen twitter @loudobbs. like the show on twitter and instagram @loudobbs tonight. vie

read on the show will receive an autographed copy of "putin's gambit." the s & p off 3, the nasdaq down. the week now. the dow up 1% not too shabby. s & p and nasdaq posting fractional losses on the week. starbucks posting its worst decline in two years. economic growth accelerating in the second quarter. the economy expanding 26%. a reminds tore listen to lou's report coast to coast on the sail fell radio network. north korea launching its second long-range intercontinental ballistic missile.

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reporter: russia is retoolating for the sanctions. it comes a day after the senate overwhelmingly approved another round of sanctions. for more on the back and forth with russia as well as new provocations from iran. we are joined by the former ambassador to the u.n. ambassador bolton, great to see you. your comments, your opinion on the chief of staff. will general john kelly help the

president better deal with our frenemies, if you will, north korea today launching missiles. john: he brings a distinguished career in the military with him. and having served as secretary of homeland security for six months. the president picked him for that job. i think bringing him in as white house chief of staff is based if not just on the president's impression of him on the transition, but six months of dealing with him. having that kind of relationship between the president and his chief of staff is critical to the running of the white house. i think secretary-general kelly starts off with that as an advantage. if you want the administration to succeed you can only wish him the best of luck in getting things under control. lori: will kelly do a better job than priebus?

john: that remains to be mean. my ideal for chief of staff was jim baker for ronald reagan. he knew how to make things run and time and achieve the president's agenda. he said the president never loses. that's an important point to keep in mind. and number two the piece of advice he used to give me was keep our eyes on the prize. focus and discipline. and i'm sure he said it base thought i needed to hear it. but that's the kinds of attitude. if jim barrack would have been chief of staff, that would have been my ideal. lori: lept unpack some of the hotpots. the u.s. is running out of time to diffuse the situation before north korea has the it in capability to strike u.s. soil which could be within a year. what more needs to be done?

john: we are close to an unacceptable point where north korea has the ability to reach the united states with nuclear weapons. the day they get that capability they will have it 24 hours later by iran writing a check to them. we ought to realize there are regimes like to north korea and iran where that doesn't work. diplomatic options remaining are very limited and i believe that means convincing china it's in their interests to allow the reunification of the korean peninsula. it's a hard argument to make. sooner we get started on it the better. i think we have to face the unpleasant fact that a president of the united states look at this threat to our innocent civilians in the continental united states, alaska and hawaii may have to make a decision to

use military force. after 25 years of failure we are close to that point. lori: the president did put out a statement condemning north korea's launch today. we are coming right back with much more so stay with us. some congressmen suggesting the senate needs new leadership after healthcare's defeat. >> at this point if i were mitch mcconnell, i would resign. lori: we'll talk to ron desantis about the future of republican leadership.

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lori: foreign adversaries testing the limits of the u.s. patience. this comes a day after iran unsuccessfully attempted to launch a rocket into space, prompting the u.s. to impose new sanctions on the islamic republican. and chinese planes buzzed a u.s. spy plane in the north shina

sea. -- north china sea. congressman, thank you for joining us. as a veteran, you served in the navy. currently a member of the foreign affairs committee. i understand you knew chief of staff john kelly. what can you share with us about your experience knowing him. >> as a marine he was as good as they come. and he's a great american. he remember when he got appointed to the dhs people said he was a good marine, but will he know how to be the head of dhs. i think he did more in six months as a cabinet secretary than many in the last administrations. i think he's a great guy and

great leader and hopefully he brings that marine corps ethos to the white house. >> i'm navy, he's a marine. the marines don't like the fact that we are all part of the department of the navy. lori: the president spoke in long island talking about the la mara salvatruchtalking abouttat. to your point will immigration. i want to ask you about russia. russia sanctions bill headed to the president's desk after passing the house and senate with nearly unanimous bipartisan support. what do you make of russia's

retallation byordering the united states to cut staff in its embassy. >> there is the north korean sanctions the house passed earlier in the year. that's included in the bill. there are a lot of good things to put pressure on some of these rogue regimes. i think russia is going to crow about it. that's fine. if they are crowing, i think we are doing the right thing. lori: getting back to kelly with his experience as a general and running homeland security given the russia situation and the ag situation, i am curious if you will engage some of your thoughts on whether kelly will be better able to steer this situation for the president? >> i hope so. part of the problem with this whole thing is you had a special counsel appointed without there

being an underlying crime associated with it. usually you identify a crime, then you investigate and bring evidence. here they are trying to find something. you hear them going into trump business dealing. that's so far afield. i don't know what kelly is going to be able to do it's a runaway train at this point maybe for congress to rein it in, but it's problematic the way special counsel is operating. lori congressman ron desantis, thank you. one adventurer proving there is no mountain high enough watches this base jumper from 22,000 feet above sea level. he glides over thesnow-capped mountains of peru. his goal is to base jump from

the highest point in each of the 7 continents. pretty impressive. attorney general jeff sessions set to announce new criminal investigations into intelligence leaks as he faces criticism from the president. >> i have not been happy with the past prosecutions and investigations of criminal leaks. we are stepping up those cases. it cannot continue. some people need to go to jail. lower * gregg jarrett takes up that case and more next.

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lori: republicans in congress are calling for a second special council to investigate potential

democratic wrongdoing. it will examine possible collusion between hillary clinton and the obama administration in the email probe as well as unmasking of americans. for more we are joined by fox news anchor and former defense attorney gregg jarrett. a band of republican congressmen have gotten together to push this issue to reopen this investigation. gregg: my question is what took them so long. i have written a dozen columns a year ago outlining all the things outlined in this letter. lori: explain why you don't think election should have been a distraction gregg: the election should have under scored the need for a special counsel because she was the democratic nominee.

when james comey laid out a compelling case for how she violated the espionage act, but at the very ends he completely misinterpreted the law saying she didn't intend to violate the law. that's not the legal standard. lori: nobody called comey out on that gregg: and why? previous attorneys general would have done so. but you had an interesting situation with loretta lynch in the chair. this committee is saying x wants to you investigate hillary clinton for the email case, but pay-to-play, than is some evidence of that, and we want to you investigate nose two people you see on the descreent right, loretta lynch for whether she unduly influenced the investigation and james comey for whether he was engaged in

politics and both arguably could be potential crimes. what took james comey so long to reveal the fact that loretta lynch asked him to lie about the nature of the investigation? he just revealed it recently in his congressional testimony. why did he conceal that information? that's why members of congress want a new special prosecutor devoted to just that. lori: and the need for a second special investigation is you point out we should take a closer look into the clinton foundation and how she used her office to even' rich herself and her husband gregg: it's a crime to use your office to confer benefit from a foreign country. her emails suggest her donors gained special access.

she helped ubs avoid the irs. after that a 10-fold increase from the tbieng her foundation and her husband got paid $1.5 million? is that pay-to-play? we need to know. there should be a special counsel. lori: the request has been put forth. what needs to happen. gregg: congress could work on its own by enacting the special counsel statute. absent that, the attorney general could appoint a new special counsel, not robert mueller, but somebody else, to look into this. there are a couple different after news, or the senate judiciary committee which is already examining loretta lynch could expand its probe into comey itself as well as hillary clinton. and the fbi has mountains of

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lori: in our online poll we asked you do you think reince priebus lost the credibility to lead the white house staff? 77% of you said yes he has. joining me, bre peyton and rachel campos duffy. let's start with the friday bombshell. what a week it's been. what are your thoughts. do you think this is the right move? >> i think this whole past week was a failure of the obamacare repeal and replacement plan on the hill. reince was supposed to have all the connections to push this

legislation through and was supposed to help the president advance his agenda it's very clear he failed to do that at every single turn. i think getting him out and replacing him with someone else makes sense. a lot of chaotic tone and media coverage we have seen of the white house could be clamped down by the new chief of staff. he will be able to put some order and clean house and get things ready. lori: do you agree with bre the healthcare failure was the last straw when combined with the anthony scaramucci meltdown with "new york" magazine? >> i think it was a combination of so many things. it seemed a lot like hbo. there was problems. i saw his first interview that reince priebus gave since he

stepped down just by came on. what a class act. he was entirely reef made loyal to the president. he was bad it to go after scaramucci multiple times during the interview and he refused to do it. class act. i think he's going out in a classy way. lori: the cover of the "new york post" making fun of the white house. i guess it begs the next question, who might be next? steve bannon or do you think the staff is stable for the moment? >> i think we have to put these recent dismissals in context. it has proven over time to be false when people said they would be gone tomorrow. so i think yes there has been two major shakeups this week,

but they were a long time coming. sean spicer and reince were completely ineffective. i think they were their own undoing. >> if anything happens to reince priebus, if he's the next to go, i think you will start to see rumblings and revolts among the conservative base who see him as a stabilizing force. >> i disagree. i think it's clear that he was kinds of the remainder of the establishment republicans who have proven themselves to be completely ineffective and completely feckless. lori: the republicans in congress, right, if you look at the healthcare debacle. i want to shift the topic for time's sake. does this put tax reform in jeopardy?

there is zero confidence the president has any support by a republican base in congress. >> i would say tax reform seems more likely. everybody in congress understands something has to get done. if healthcare is on life support right now, they better get moving on taxes which will provide a bump in the economy and give the republicans some hope when they come up towards the midst terms. -- in the mid-terms. lori: what will next week bring? >> i think we can look out for potential rumblings about revival of the healthcare debate, tax reform and donald trump's harsh stance on immigration and his efforts to bring law and order to this country. >> the happiest woman in d.c. is sally priebus tonight.

thank you for your time. check out lou's new book with jim born called "putin's gambit." viewers are loving it.it's onlis everywhere. >> announcer: from fox business headquarters in new york city, the new "wall street week." maria: welcome to "wall street week." the program that analyzes the week that was and position you for the week ahead. coming up, my exclusive interview with house speaker paul ryan. and hum erwin blood's managing director. everything from wall street to main street. amazon beat expectations but