they have many days ahead. >> speed demons. you have experience having twins. rick: i have. >> didn't have them on the highway. rick: good luck. not on the highway. congratulations. >> thanks for joining us everybody. "america live" starts right now. megyn: fox news alert. we are getting new reaction in just the last hour from the international olympic committee in the now growing controversy over a young chinese swimmer. welcome to "america live", everyone, i'm megyn kelly. chinese swimmer ye think win, facing allegations of doping. it was a incredible win in the 400 meter individual medley. the 16-year-old smashing a world record by a full second and smashing her own personal best by five seconds. she even saled past the time set by the winner of the men's event in the last leg of the race, ryan lochte. in the last leg of the race she beat the male gold medal

winner's time. professional swimmers worldwide raising serious questions about whether she has taken any sort of performance-enhancing drugs. some calling it unbelievable and flat-out disturbing. an official from the united states is calling for a full investigation. and now the international olympic committee is lashing out at the accusations. just moments ago saying people quote, need to get real. and pointing out that records are being broken all over the place. we've got a live report in moments. megyn: but first a developing story out of washington. the daily white house press briefing just got underway and we're awaiting possible new reaction about a decision by the democrats to make a national gay marriage endorsement at their convention in charlotte. the democratic national committee has approved a plan to embracsame-sex

marriage as part of the party's platform for the upcoming convention in charlotte. just back in may north carolina made headlines for officially limiting marriage to that between a man and a woman. so far democrats in the white house have stayed tight-lipped what is a divisive issue still in this country. in fact here is how the white house responded just yesterday. >> the president's position on this view has been well-chronicled shall we say, but in terms of a specific reaction to the platform i would refer you to my colleagues at the dnc. megyn: chris stirewalt, fox news digital politics editor and host of "power play" on foxnews.com. chris, i understand they can, this is preliminary approval to put it a part of the party's platform. that means it is part of what the democrats stand for and gets announced at convention. that is what they bring to the american public at the convention. so it has yet to be officially rubberstamped but the first step has happened. they put it in the platform. the question whether this is

fraught with political peril even though the country more and more is becoming accepting of gay marriage? >> well, megyn, this is one of those where is it worth it? because there will be some advantage for the president, certainly, among the considerable number of are proponents of same-sex marriage, of gay donors. it will be good with the base of the party. it is, democrats, largely now support this. the question is, is it worth the price that you pay in swing states like ohio and florida, and for candidates, for downtickket candidates running in those places is it worth the price of bringing up a controversial issue which still in some states is very unpopular. you see big gaps legalizing same-sex marriage. question democrats have to ask themselves, it feels good but it is worth it. megyn: when the president told robin roberts of abc news that he was in favor of

gay marriage, he personally supported it, the white house took plains to point out the distinction that was president obama's personal view and came out and said this is a personal decision. this is his personal view and wanted to underscore that this was wasn't policy. he wasn't changing white house or administration policy. if this goes into the party platform, does that change things? >> well, they can certainly weasel word it. there is a way to do this, basically the platform would reflect the president's, think it is a cool idea and everybody who wants to get married to the person of the same sex ought to be able to do that but it is okay for states like north carolina where they're having the convention to outlaw in very strict terms that practice. so they could go for a straddle like this that would be satisfying to the base but at the same time would leave things ambiguous enough. but i got to tell you, even talking about it, even bringing this up at a time where with the president might have had this issue laid to rest when he came out with his straddle did,

even bringing it up stokes fires. while there are a lot of folks in favor of this, most folks don't care. the strongest feelings though are antis, people who are opposed. poll after poll shows opposition is much stronger than strong support. megyn: what is going on with this convention, chris? there has been all the controversy having it in north carolina, a state that is against gay marriage by their constitution as of late. a state that right to work. so the union folks are upset. and now, so that but nonetheless democrats are having it there. they have had fund-raising problems. top democrats say they are not going. they plan a convention which with the platform of the party is suddenly to endorse gay marriage, something the president stopped short of doing on a policy level and, we're going to talk about this at 1:30, now they announce, a, bill clinton will give a keynote speech where he made some controversial statements about this president's policies, and b, elizabeth warren, senate candidate in massachusetts will have key speaking role. she is the one most famous

other than our president, making not exactly the you didn't build it comment. that is her meaning. she first came out, you're successful good for you. you owe more, more to society for your success. however she put it and we'll play it a little later. >> they will have to better enjoy the barbecue down there in charlotte because there will was lot of things that are difficult for the democrats as they go there. this was a risky choice to begin with, at a time when president and democrats were feeling more confident, confident about their fund-raising, confident about their ability to hold red states while everybody knows the president will not win in north carolina. they're having money troubles. they're having all these things. this is further evidence. see it in republicans quite often. this is further evidence how the base of your party, activists of your party can complicate things for you with this gay marriage endorsement. though can complicate things for you at a time you don't really need it. megyn: chris stirewalt, thank you, sir. >> you bet. megyn: also from the campaign trail today, governor mitt romney's traveling press secretary is apologizing for losing his cool with reporters.

it all started when the media started shouting questions at the governor as he left the tomb of the unknown soldier in warsaw, poland. here's what happened next. >> governor romney, are you concerned about some of the mishaps on your trip? >> governor romney -- [inaudible] >> what about your dad -- [inaudible] >> governor romney, just a few questions, sir. you haven't taken by three questions on this trip from the press. >> show some respect. >> on some tapes you can also hear him say, kiss my a. he called, he has called the reporters to apologize saying his remarks were inappropriate. reporters were there trying to question the governor about some of the controversies that have cropped up during his overseas trip. now back to our top story. we're closely following the

growing controversy over an olympic gold medal winner and the ugly dispute between the chinese, the u.s. swim coach and now the international olympic committee. the teenager, 1 of 6 years old, shattering not only her own record but also beating in the last leg of her race, the time by the winner of the men's event. so the men gold medal winner, what he swam in the last leg, was not as fast as what the female, the 16-year-old female swam from china. professionals today calling what she did impossible. trace gallagher live in the west coast newsroom on the breaking news on the international olympic committee and where this is going of the trace? >> reporter: we should go over this again for context of our viewers. she beat her personal best by five seconds, right? she beat the world record, men and women, by one second. it is the first time in olympic history that a female has swam a lap faster than the gold medalist. yee think win trains part of

the part of the year. because she trains incredibly hard. the director of the u.s. men's coaches john leonard, very outspoken guy, said called the feat impossible. he is quoting here. the history in our sport will tell you every time we see something unbelievable, history shows us that it turns out later on there was doping involved. even suggested that china was using genetic manipulation. now shiwin was asked directly about the doping, she responded quote. the chinese team had firm policy about doping. my results come from hard work and tripping and i would never use any banned drugs. the chinese people have clean hands. not always. look at this. in the past the chinese have gotten busted doping a number of times n 1994 in the asian games, seven tested positive. 1998 the world championships. four tested positive. these are all swimmers.

and in 2009, five junior swimmers were banned for testing positive. now that said, the medalist, the gold medalists are automatically tested in these games. the olympics has a special investigative committee looking into these allegations and so far, ye shiwen appears clean. hear is the ioc medical chief. play this. >> you asked me specifically about this particular swimming. i say no, i haven't personally have any reason other than to applaud what has happened until i have further -- >> that said, doping can be beaten. that has been proven. but today the ioc came out adamantly saying this is sour grapes and to leave it alone and give her due. listen to this. >> i think we need to get real here. these are the world's best athletes, competing at a very highest level. we've seen all sorts of records broken already all over the place.

>> reporter: u.s. swimmer ryan lochte being very diplomatic. hey, i don't know if i went head-to-head with her she might beat me in a race. right now, she's the best. megyn: this is incredible. trace, thank you. >> reporter: yep. megyn: coming up in "kelly's court", a top u.s. swimming official as trace mentioned is suggesting that doping is not only a possibility but the chinese may be again net i canly modifying their athletes to guaranty gold wins. we will go in depth and this woman's training and talk about whether this is scientifically possible. could the accusations be true? what if they're not? is this a case of cheating or sexism? we'll talk about it in "kelly's court". also up next, a colorado family faced with what they call a very tough decision, thanks to the president's health care law. either ignore your faith, or give up the business that you have spent five decades building. that is almost literally what the obama administration told this

family. a court saw things a little bit differently. the family is here next. right after the break. plus, the beginning of a murder trial trial that has been years in the making a former police sergeant in chicago accused of killing his third wife while his fourth wife remains missing. of geraldo rivera will beer here to talk about the man very publicly accused of murder. did democrats add more fuel to a major campaign controversy by picking massachusetts senate candidate elizabeth warren to speak at a featured role in this year's democratic national convention? that debate just ahead. >> no. there is nobody in this country who got rich on his own. nobody. you built a factory out there. good for you. but i want to be clear. you moved your goods to market on the roads the rest of us paid for. okay, team! after age 40, we can start losing muscle --

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megyn: fox news alert. the white house taking questions moments ago about new challenges to the president's health care law and the new loss for the administration in what is becoming an important legal case out of colorado. it is getting national attention now. hercules industries is a heating and air-conditioning company started in 1962 by the new land family. it was built from the ground up over the past 50 years. it now employs 260 people. they also happen to be faithful catholics who asked for a waiver to the new health care law because of the contraception requirements. they say those run counter to their catholic faith. the justice department basically said, too bad. if you don't like the rules you can always abandon the business. a eminer about of the new lynn family joins me now. paul nel. in is a owner of the here cue louis industry and his

joins me. paul, i don't think we overstated the case. the justice department brief came out very leery in their position paper saying look you don't have to be in the hvac business. hercules indid industries is not a religious employer. it is hvac employer. it has shown no requirement that it engage in the hvac business. any burden you face is caused by your choice to enter that business. your thoughts on that, paul? >> certainly an interesting position. our position, megyn, is that we believe that every american, including those in business, have the right to do business in accordance with their faith and that is very simply that is our statement. that's what we're all about. megyn: am i wrong? because the president came out repeatedly and said we will respect religious liberty. we do care about that but we also care about women who need contraception coverage. we struck the appropriate balance to protect religious

liberty and then he went into court and argued that you know, paul can, the balance here means pal can either get out of the hvac business or provide free contraception to his employees? >> yeah. that's, i think that's what we've heard. you know, let me start out by saying, that our family business has been built over 50 years and three generations with really faith and values at their core. we don't feel that anybody, particularly those in washington, at any time, should be able to tell us what to do, when to do it and how to exercise our faith. quite frankly to us, faith is not a two hours on sunday morning event. it's a life-style that we live and have for 50 years. so it's embedded in our feelings. megyn: so, matt, you go into court on behalf of the newlands and file a challenge to obamacare and say you can't do this. you can't force families

like the newlands because they're self-insured to pay for contraception coverage and abortion aides and so on against their religious will. the department of justice comes in and says, yes we can. what did the judge say? >> in this is the first ruling on religious freedom and the judge ruled that obamacare can not be used at least for the time-being, to force this family to choose between its faith or facing massive government penalties and fines. that is really why alliance defending freedom brought this case to make sure that every american as stated in the constitution in federal law, will be free to live and do business according to their faith. megyn: paul, we've heard from many folks who like this coverage, look, you're an employee. you have 260 employees. a lot of those women want contraception coverage and they shouldn't be forced to go without because of your religious beliefs. they believe it is discriminatory against your

female employees who may not share your beliefs. what say you? >> well, you know, we obviously we heard that but hercules has again, we've been in business for 50 years and have a great reputation for taking great care of our employees. we have very, very generous packages for our employees. the support with our employees from top to bottom, everyone in the company has been exceptional. and but keep in mind, this is not about hercules. it is not just about hercules. this is about something much, much greater at stake. and that is our freedom. that is really the focal point of the issue. and you know, obamacare puts us in a really bad position. they have said, you can do one of, pick between one of two evils. you can either choose to abandon your faith, and you clearly, you know how we feel about that, or you can pay millions of dollars in fines and that would eventually cripple our business and harm the company and all of its employees. that is the choice we have.

megyn: matt, even as of today the white house spokesman jay carney talked about how he thinks that the administration has found a place that respects religious liberty and talked about how no religious institution or university has to provide contraception coverage. he, that excludes small businesses like that of paul's. and the judge who sided with you was a jimmy carter appointee. one presumes he is not some die-hard righty. >> that's right. i can hear in president's spokesman that he is picking and choosing what faith is, who can practice faith and he is violating the constitution and congress which clearly protect religious freedom for every american to empower them to be free, to live and do business according to their faith. megyn: we will see where this goes now on the legal front as this challenge has met with its first success. paul newland, matt bowman, thank you so much, sir. >> thank you, megyn. megyn: coming up a dramatic

free speech fight in russia now getting international attention. in three minutes see why a female punk band in russia is facing three years in prison for daring to criticize vladmir putin. are you receiving a payout from a legal settlement or annuity over 10 or even 20 years? call imperial structured settlements. the experts at imperial can convert your long-term payout into a lump sum of cash today.

megyn: female band in russia is now on trial after taking a hard-line on prime minister vladmir putin's policies in a very public way. the group wearing masks, used lyrics to protest his views while in a famous cathedral. now they're facing some serious prison time. trace gallagher live in the west coast newsroom with more. >> reporter: it is a female punk rock band named after female body part which we won't say the name and the

group performs at a lot of different venues wearing ski masks you talked about. they sing about russia's impressive authoritarianism. they're very outspoken critics of president putin and prime minister medvedev. they have danced in front of jails that housed political dissidents that caused for their release. what got them in biggest trouble, right here, the storming the christ the savior cathedral and singing the following lyric i'm quoting st. maria virgin, drive away putin, drive away, drive away putin. they followed that with a string of obscenities the church called them blaspheme mouse. they were arrested and charged with hooliganism and they're facing seven years in prison. here is some reaction. listen. >> a society without moral grounds can be far more drills than a society that is too harsh to performances like this so to speak.

you have to balance things. so obviously seven years is too harsh but what they did is also quite despicable and the message has to be september. >> reporter: ah but these arrests triggered protest all across russia and all across europe for that matter for silencing this peaceful expression. by the way, two of these three members of the group are brand new moms, and a well-known russian artist is even doing his own protest by stitching his mouth shut, saying that the russian government is trying to silence him. big names, megyn getting involved. sting, madonna, peter gabriel, the red hot chili peppers all getting behind the group saying they should be released immediately from prison but, looks like this thing might go to trial. and they're not getting out. megyn: wow! unbelievable. thank you for the correction. vladmir putin is of course the president of russia again after he was prime minister. president before that and who can keep up. >> reporter: they switch back and forth. megyn: thank you, trace.

unbelievable story. thank you. new questions today about whether democrats may have added more fuel to the you didn't build that fire. >> there is nobody in this country who got rich on his own. nobody. you built a factory out there. good for you. but i want to be clear, you moved your goods to market on the roads the rest of us paid for. megyn: you heard it from her. you head it from president obama. and then it blew up into a huge controversy. was it the right move to pick massachusetts senate candidate elizabeth warren give a very high-profile speech at this year's democratic national convention? or will this cause more attention to an issue the white house house is trying to put behind it? we'll have a fair and balanced debate next. congressional investigators are blaming five he ranking firms at the atf for the botched "fast and furious" operation that allowed guns into the hands of cartel. that is not all the blame they're handing out but

they're starting with the atf and they're naming names. wait until you hear what happened to those five. disturbing polls show more americans are concerned about their children's future than ever before. just a smatter of foals now believe their kids will have a better future than they had. michael reagan just ahead how his father was able to inspire optimism about the america's future and whether the eternal light of lady liberty's lamp is shining at the golden door as bright as it was back then. >> my dream is you will have liberty's lamp shining your steps and opportunity ace arm steadying your way. [ female announcer ] granola thins. from nature valley.

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megyn: new questions about the democrats' decision to have massachusetts senate candidate elizabeth warren give a high-profile speech at democratic convention. the obama campaign has been criticized after some say he suggested small business owners owe a big shaffer their success to the government. it turns out the president may have cribbed that argument out of elizabeth warren's playbook. >> i hear all this class

warfare. no. there is nobody in this country that got rich on his own. nobody. you build a factory. good foreyou. but i want to be clear. you moved your goods to market on the roads the rest of us paid for. you hired workers the rest of us paid to educate. you were safe in your factory because of police forces and fire forces that the rest of us paid for. you didn't have to worry that marauding bands would come and seize everything at your factory and hire someone to protect against this because of the work the rest of us did. you built a factory and it turned into something terrific or a grade idea. god bless. keep a big hunk of it. but part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along. megyn: david webb, host of the david webb show and mark hannah,

a former aide to the john kerry and barack obama campaigns. we know elizabeth warren will have a featured role at the democratic convention. some thought she would be the keynote speaker. now she is not the keynote speaker. some say because of these controversial remarks. some say this is madness by the obama campaign as we are trying to get people off this "you didn't build that" theme to put somebody who is so famous for that theme in a featured role at the dnc convention. >> i followed elizabeth warren for years and she is a marxist of what she says and preaches. soviet army watch, built by american because they outsourced it. she says communist china is a

model. megyn: she came out with a new ad in her senate campaign and she talks about how great china is doing and says we should do better like china. >> she says we should increase our gdp experiencing for infrastructure and roads. we start with the eisenhower system. we have a maintenance issue. the need has to be there to build. also you don't create these jobs by spending a trillion dollars. megyn: do you think it's a wise political move to put her in this featured role? >> actually, yes. this is not intended for myself, independents or those that wouldn't vote for obama. they need to shore up their base. in order to do that the progressives, not the democrats or the traditional kennedy or

truman democrats need to play to the progressives other sub sets they want to stay in line for the votes. this is an election on the margins. megyn: we have been talking about you are probably going to get the progressives. they are probably not going to vote for mitt romney. >> david mentioned the kennedy democrats. the kennedy democrats were in favor of this rising tide lifts all boats. to say that elizabeth warren by saying we should be collectively responsible for our prosperity and we owe each other a defendant service, that is somehow a communist platform shows a gross misunderstanding of communism and the democratic platform. megyn: is this a chance for elizabeth wharton rehabilitate barack obama on an argument he didn't articulate as well as

she did? >> i think there is a massive philosophical difference of opinion here in how capitalist economies should be run. no less than the godfather of capitalism himself adam smith said the government's role, it has three roles be protecting the national defense, social justice and public works. roads, things that private enterprise can't do on its own. to say this is snoot capitalist argument -- >> we ignore the economics and economics is where it matters. those roads and bridges and machines used to build them, they weren't invented and owned by the government. those are built by private corporations. it's private capital. it's taxpayer dollars that pays for the government. the government doesn't have money. it's taxpayers. let me finish my point. it talks about the legacy of

taxpayer dollars and government dollars. there was someone who started that chain and it came from revenue generated by private capital. government's role, there are no marauding gangs come together gates of factories. it comes from private capital and moves forward. >> government has a role to enable a system that promotes prosperity. where these capitalists can make money. they have an environment where they don't have to worry about security. they have a workforce educated through a public education system. which we all pay for. when did paying taxes become a penalty and not part of our civic obligation. megyn: the president was saying the so-called rich over $200,000 need to pay more. coming up next a major murder trial years in the making getting underway today. drew peterson accused of murdering his third wife.

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so i know how important that is. megyn: opening arguments began this morning in the drew peterson trial. we were first introduced to the former police officer in 2007 when his fourth wife mysteriously vanished. stacy peterson has not been seen since. drew peterson, who is 30 years older than stacy, is a suspect in that murder today. when they were investigating that mystery, they came across information that his former wife calfr kathleen savio drowned in

a bathtub. investigators say he killed her because he was concerned their divorce settlement could financially ruin him. >> is this drew peterson? >> it sure is be how have you been? >> i don't have much to say to you. i can't wait until you are indicted. i can't understand why people put you on television. i think you are a repulsive person and i think you murdered both your wives. >> that's wrong. i'm glad you are an objective reporter here. i'm glad you take a look at both sides. megyn: geraldo rivera is the host of "geraldo at large." opening statements in the murder

case are underway and this trial has begun in earnest. what do you make of it? >> i think he is a repulsive person. what is shocking looking back on the facts is how ready the community of bowling brook, the chicago suburb was, to accept the explanation that kathleen savio died as a drowning victim in the bathtub. even though they had had an acrimonious and physical relationship. even though he started the affair with stacy peterson the soon to be 4th wife who later disappeared and is presumed death. everybody took it as gospel that this poor woman has somehow passed out in the bathtub and drowned, in the face of forensic evidence, if you are in a bathtub you get in the water you

get jerky and wake up. the fact that she had drowned by herself and there was no toxicity in her system. it showed clearly this cop did it. because he was highly respected and he was a glib and charismatic guy, that's why the media continued long after he was the target of both these murder investigations to treat him as a celebrity, i think it's appalling. megyn: the facts as you lay them out are reminiscent of the o.j. simpson-nicole brown simpson murder case. there was a long history between the couple. it wasn't just that the person wound up dead. but there was a long history of domestic violence. it was march 11, 2002 that savio filed for and emergency protective order saying drew

wants me dead and if he has to he will burn the house down. in november 2002 she talked about the numerous times in her marriage to drew where she ended up in the emergency room for injuries only to have the police leave her home without filing any reports. within two years she would be dead. >> what is fascinating in o.j., the only difference is people almost automatically and immediately assumed that he did. he had an apparent alibi, he was at that golf tournament in chicago. but it was pretty quick after mark fuhrman and others traced some of the physical testified to o.j.'s house that he became the target of the investigation. in this case there was no real investigation or autopsy of kathleen savio. it was only the disappearance of stacy peterson, maybe we should take another look. let's start by exhuming the

body. michael baden took one look at tragic remains before dr. baden and others said this woman -- there is no trauma, there is no way that she hit her head. this is a woman who was drowned. this is a murder scene that was staged. the thing you said that has to be emphasized is we are hearing the voice from the dead. we are hearing these voices from the grave. the question is, what of that information -- if i'm dead it's my husband that did and all the rest of it. how many of those statements can be introduced because that's hearsay evidence generally speaking, illinois has a law that broadens the extent of thed a missability of hearsay. but that will be the legal test as this case goes forward because so much of the evidence is circumstantial.

megyn: it sounds like a ruling came down at least in part. if they can put the words in the mouth of the defendant, drew peterson, this person said drew peterson said, then that comes in. but if it's just the decedent saying he's going to kill me, it looks like that's out. even if you think drew peterson did it and he seems like a bad guy and it's mysterious that so many wives have gone missing. the coroner first ruled this an accidental death. that's a big obstacle for the prosecution to overcome in proving murder. >>it is. i cannot state strongly enough how i believe this is a murdering dog, drew peterson. the facts as i know them and having read all the document you cried for our audience. it was incompetence on the part of the coroner. there was an absolutely undue

deference paid to the fact that he was a cop and widely regarded or popular in the community. it was almost over before it began. but that is an obstacle for the prosecution. this conviction by no means though it's certain in my mind is not at all certain in the court, though i'm hopeful the jury in a totality of this evidence will see through this murderer for what he is. megyn: the women need to pay attention. wife number four comes along and start quheeght him on the third wife. he allegedly makes some incriminating statements to her about what happened to the third wife and the 4th wife winds up mission under similarly mysterious circumstances. a new twist this hour in the controversy over world record setting chinese gold medal swirl and charges she took drugs or may have had help from something even scarier.

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megyn: what was meant to be a fun-filled day at the beach turned into a near tragedy for one swoirnl cape cod. a father was body surfing with his son when a shark showed up. >> reporter: frightenning for the victim and witnesses on the beach who said it was like a scene from the film "jaws." at 3:30 yesterday.

there were no lifeguards on duty when a man and his teenaged son went body surfing 80 yards offshore. a large coursele fin popped up and the man was dragged under water. his wounds are described as deep. >> a fin about this big came up and it was torquing. what did we just see. it was like out of a movie. but you knew it was a shark. >> we thought we were watching a movie. we looked at each other wondering did we just see what we think we saw. >> reporter: there hasn't been a fatal shark attack since 1936. but you can see schools of great whites do travel close to shore in search of seals. since 2,000 there have been 800 shark attacks worldwide.

nearly 500 of them in the u.s. with five fatality. those numbers are small when you consider thousands of miles of coast and millions of swimmers. but little comfort to yesterday's victim who is recovering in the hospital. megyn: in the 70s my dad caught a shark off the beach in truro. a enough new report is blaming five high-ranking members of the atf for much of went wrong with operation fast & furious. the gun-running sting that put hands in the hands of blood-thirsty drug cartels. wait until you see what happened to those five officials. could america be losing its luster? michael reagan joins us to explain how his father was able

to instill optimus optimism. >> america's best days are yet to come.

megyn: a fox news alert. a scathing new report naming for the first time the men who shoulder much of the blame for a gun-running operation that put weapons into the hands of some mexican criminals. a brand-new hour of "america live." welcome, i'm megyn kelly. five high-ranking members of the atf singled out as responsible for operation fast & furious. no one has been fired, just reassigned. operation fast & furious purposely allowed the sale of nearly 2,000 guns to mexican drug cartels. they were supposed to be tracked, they weren't. dozens of those guns have turned up at the scenes of violent crimes in mexico and the united states including border agent

brian terry who was killed in a shootout with drug cartel members last december. house republicans held the attorney general eric holder in contempt of congress for refusing to provide thousands of documents and for what they said, stonewalling the u.s. congress. william lajeunesse joins us from los angeles. >> reporter: if you buy into that it was necessary, over and over this report disputes that. this report says the operation could and should have been wrapped up in weeks, not a year and a half. multiple people from different agencies warned operation fast & furious was going too far and atf has all the evidence and probable cause it needed to arrest those involved early on it could have stopped the sale of the guns that killed brian terry because this man lied

about this address when he first bought operation fast & furious weapons. atf had the form but ignored the lie that would have allowed him to arrest him. the report also criticizes atf for not arresting the ring leader acosta sooner. why? because he was already a target of the atf. the report says atf dropped the ball. quote, if atf bothered to conduct a thorough review of all the information contained in the wire intercepts. operation fast & furious might have concluded a year earlier than it did. the atf was knee deep in this. the fbi did not stop them but a million dollars was spent on guns. 2,500 of them. they refuse to tell congress how much of that was taxpayer money and why they never told the atf

their suspects were already working for the u.s. government. i just got a statement from the department of justice a moment ago. basically it says, quote, predictably this republican report shows the debunks conspiracy theories representative issa has been advancing for a year and a half. this is the first of three reports. the next will focus on what they consider obstruction of justice. megyn: william, before i let you go. these five men have been reassigned, reassigned from their positions. they are still working on the federal taxpayers' dime? >> reporter: we just heard deputy director hoofer submitted his re d director hoover submit his resignation.

but the. >>er four out of the five are still work on the taxpayer dime. the attorney general says he's waiting on the i.g. report to see what the report says who is responsible. megyn: the deputy director resigned. four other people involved end up shuffled off to another desk job. five minutes to that part of the story. another fox news alert. the white house briefing wrapping up a few minutes ago and lots of tough questions on the economy today ahead of a highly anticipated jobs report due out this friday. this after last week's commerce department report showed the economy slowing to an annual growth rate of 1.5% from april through june. they had predicted it would be at 2%. it wound up disappointing even that number. even those who believed it would be there. our chief white house correspondent ed henry is live in the north lawn.

>> today there was a report showing consumer spending was down for the first time in a year. that sets the table in a negative way for the president this coming friday. a new jobs report coming out for the month of july. take a look how things have been sort of panning out over the first six months of this year. it was strong for the president in january-february. 259,000 created in february. you look at march and april it started slowing down. may and june also far below expectations in june. just 80,000 jobs created. that's why all eyes will be on this new report friday. when jay carney got some of those questions on the economy today he acknowledged things are not where they should be. >> the president is not satisfied with where the economy is. he knows the american people by and large are not satisfied with where the economy is and that's why he's doing everything he can and he's urging congress to do

everything it can to take action to help the economy grow faster and to help it create more jobs. we are in a situation now where congress is about to leave town. the house should act to pass the tax cuts for the middle class, 98% of american taxpayers. >> reporter: the white house view is to continue the keep the pressure on republicans on capitol hill. from the romney camp they have been putting the pressure back on the president's policies. his former press secretary robert gibbs said the buck stops here with the president. megyn: in the middle of concerns with the political fallout we receive word that president bill clinton will deliver the main address at the upcoming dnc convention. brit hume last night described the move by the obama campaign

in three letters. three letters. s-o-s. >> you can describe clinton's role at the convention s-o-s. his party lost control of the house of representatives in 1994 after an unpopular healthcare bill. after that failed he affected to the center -- he tacked to the center. barack obama has not done this. this is a distress call. pat caddell. do you agree? >> yes, this is a distress call. especially when you understand how obama regards clinton. for president clinton, this must be a moment of rejoicing, got mine now. but there is a bigger issue here. this is a totally different

leadership style. it is voters -- and i talked to swing voters and focus groups. they identify with what bill clinton did. he was willing to change course. he compromise. he went more to the middle. they contrast that very strongly. these are voters who should be democrats and they favor that model. the issue for those people and the republicans' challenge will be, who is closer to bill clinton's leadership style? that's the problem the president has. he's reaching over for the president's popularity. clinton is the most popular he has ever been. megyn: he tries to get president clinton to vouch for me. you can trust him to do a second term. >> bill clinton will be a good soldier because he and his wife do not want any reflection they did not. but the challenge the republicans have is they don't

go snarky about what he said about obama. they can take this use of bill clinton as a evening and drive it down for the swing voters left in the election. megyn: is there a risk because bill clinton is so popular and the two men are so different. remember me ... we ran a sounds bite when he said remember me? i'm the guy who balanced four of the eight budgets. >> there is a risk that the white house is running. that's why brit is right and others that this is a desperation move but one they feel they need and they are hoping that will reflect off them. what i'm saying is it may actually reflect backwards and badly. megyn: what do you make of the other decision they just announced which is elizabeth warren will be making this

speech on wednesday night at convention. she is known best for claiming she is a native american when she may or may not have had a great, great great grandma who is part cherokee. >> reporter: this is doubling down on what is hurting the president. this i don't understand. they think she is a strong consumer advocate. if you take bill clinton's comments. scott brown is running an ad in massachusetts with president clinton and lyndon johnson talking about how small businessmen built the economy. and she is saying you didn't build it even more extreme than the president. they are doubling down class warfare. they decided that's where they are going to cut the election. it undercuts the very image that bill clinton represents. talk about mixed messages. megyn: we have a dramatic claim in the controversy surrounding china's new super swimmer. a top swimming official

suggesting not only is doping a possibility in her incredible win, but also genetic engineering. we'll take a look at those allegation and whether that's scientifically possible when a surprise witness joins us in today's "kelly's court." a routine traffic stop turns into nothing but when bullets start flying. a new poll exposes with american parents believe about their children's future and it's not pretty. it could have a major impact come november. president reagan's son michael reagan is here with how his father dealt with the challenge of bucking up the national spirit. and whether lady liberty's lamp is still shining brightly. >> the glistening hope of that lamp is still ours. through that golden door our children can walk into tomorrow

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megyn: a scathing report on operation fast & furious that pins the blame on five officials, four of whom are still being paid about it taxpayers. this guy former deputy director william hoover william lajeunesse told us may have submitted his arig nation yesterday. and, and then mark chait. they have been reassigned. joining me now, julian epstein.

a democratic consultant who worked on several high-profile campaigns sanjay sekulow. the republicans in the house are going to come out and talk about what they call doj obstruction. this is focused on atf and who is to blame for this mess. do we learn anything from this report that we didn't know before? >> we sure did. number one, the gun running program was known by officals in washington, d.c. remember that the attorney general previously testified it was a local operation and washington, d.c. wasn't involved tonight. that myth has been debunked. we know guns taken from operation fast & furious and used as part of the operation fast & furious project were used to kill the brother of the attorney general in one of the

states in mexico. that is new news at least to the public. and there was a big operation to keep that silent. so what you have got. the atf and the department of justice knew what was going on. no wonder they are trying to not give information to congress. the more we find out, the worst it gets. we are paying for at taxpayer expense at four, maybe five of these officials involved. get rid of them. the department of justice knows everything. we don't because they haven't given us the documents. but the department of justice knows everything. if they have been reassigned they should be removed. that's what eric holder needs to do now. megyn: what do you make of that, julian? if they have enough to reassign them, why are we still paying them? why not let them continue in their current positions or fire them. what is this middle ground, the

purgatory these guys are in? >> a proper investigation hasn't been conducted yet. it's being conducted by the inspector general. i think this report is old wine in a new bought. this process the city -- the committee is using is amateur hour. the staff writes the report then circulate it to the members so the members have an opportunity to read it and vote on it. here what they did, the staff wrote a report. it wasn't reviewed by anybody. issa leaked it to the newspapers and wasn't provided to the members. i totally disagree with jay's characterization. all this report shows is there were mostly low-level officials with the exception of the atf heads in the field office in phoenix. if it had a minor passive role

and reassigned appropriately. this was low-level field officials whose superiors did not exercise the proper oversight and judgment and there is no evidence this was conducted, known and approved at the high levels of the justice department. this is confirming everything that i and the democrats have been saying for many months. this was a field operation that started under the bush administration. all these officials were employed by the bush administration. continued by the obama administration. they didn't have the proper oversight. megyn: melson he has been reassigned to work in the office of legal policy in the justice department. he's working in the justice department right now. >> now we have him leading up legal policy? this is absurd. julian, let, be realistic. you had the acting head of the

agency was are of it in washington, d.c., that's about as high as you are going to get. i'm stuff with something was started under bush. operation wide receiver under the bush administration was in conjunction with the mexican government. here the atf agents and the officials within the atf and doj didn't want any information out on this to the mexican authorities because now we know a brother of an attorney general for one of the states in mexico was assassinated at the hands our own weapons. megyn: let him finish the point. >> very quickly here. here is the problem. there is enough testified to reassign these people, there is enough evidence to remove these people. this has been going upon for almost two years. this is a stall game through the election. a lot of this information is new, at least new to the american people. megyn: can you answer me this. when will the doj's inspector general's report come out? do we know?

>> hopefully soon then we'll take the appropriate actions at that point. jay said that he disagreed with guns walking whether done in conjunction with the mexican government or not. so i will continue to points out this program of guns walking started under the bush administration. secondly. melson has testified repeatedly that he did not inform people higher up in the justice department that this program was ongoing. and as to the appropriate -- as to reassigning or firing which i think will probably occur with lower-level officials in the field office, the guys doing this without proper supervision, i think that will occur when you have a proper investigation by the inspector general. megyn: i have got to run. >> this did not go through the proper channels. >> it many amateur hour. megyn: all right, boys. always fun seeing you. thank you both. coming up.

president reagan often spoke of america as a shining city on a hole. but according to a rasmussen reports poll americans think a cloud hangs over that city and the future it holds for their children. a party?

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megyn: gas prices going up. after falling for months they have been on the rise for four weeks. $3.50 is the average. up from 2 cents yesterday. still below where it was a year ago. then it cost $3.70 for a gallon of regular gas. some terrifying video from indiana. it started with a police officer making what he thought would be a routine traffic stop for a

busted taillight. that led to an incredible scene. a high-speed chase that stopped when the driver jumped out of his car and this is what happened next. the suspect fires 12 shots in a span of 16 seconds leaving the officer clinging to life on the side of the road. trace gallagher has more. >> reporter: this really was just a fix-it ticket. he had a broken taillight. when the police told him to put his hand up, he wouldn't. that's when instead he decided to press the gas pedal and he took off. that high-speed chase lasted several blocks. it ended. the guy just sat there, then the video. he fires 12 shots -- or 16 shots in 12 seconds. and then there is the chase part of it.

he walks out of sight. you can hear him keep going. now listen as he gets back in the car and takes off. the police officer calling for help. >> help! help! i'm dying. >> no, you are not, buddy, you are not going to die. >> reporter: he's in good condition. but the suspect got back in his car, went back to his apartment and got geared up with more ammunition and more weapons. then drove teen apartment complex. the cops barricaded him off. he tried to make it run through the police cars. he opened fire on the cops, they opened fire on him, killing him. that officer is now listed amazingly in good condition. the suspect james lockhart shot and killed at the scene. megyn: wow!

president ronald reagan helped restore american pride and optimism during this time in office. but parents are now more concerned about their children's future. coming up we'll ask michael reagan about whether his father's inspiring words about this country and her future still ring true. a growing scandal about the record-setting swim by a female chinese athlete. it's raising concerns about possible doping and concerns that china might be genetically modifying its athletes. what? in "kelly's court." >> i think we all hope it's because hard work and because she is a natural. that's why the ratings are through the roof. what she is bearing the brunt of is a history of state-sponsored doping in china and china

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for relief from tough headaches. megyn: a little new information now what has been a huge story for the last couple of days of the country of india know rocked by its second massive blackout in 24 hours. this one impacting more than 600 million people. that's 8.5% of the world's entire population in the dark. police stations, transportation systems, water systems, private

businesses, all grinding to a halt. we are trying to get a live report a little later this hour. >> may all of you as americans never forget your heroic origins. never fail to seek divine guidance, and neve lose your natural god-given optimism. and finally, my fellow americans, may every dawn be a great new beginning for america and every evening bring us closer to that shining city upon a hill. megyn: that was of course president ronald reagan, rallying this nation through some tough times and in the end he helped restore a sense of pried and optimism among americans. but his shining city on a hill may be losing some of its luster a new poll suggests that more pents

than ever before have doubts about their children's future. rasmussen reports asked parents whether their kids today will have a better future than they did. just 14% said yes. a whopping 65% said no, they will not. that is a troubling new low for a question that scott rasmussen has been asking for several years now. he is with me now. scott rasmussen, independent au, the people's money. along with michael reagan, chairman of the reagan group. wow, what a contrast between, you know, your father, michael, talking about your, one's natural, god-given optimism and your poll, scott, talking about how americans aren't feeling that. at least when it comes to their children and their futures. let me start with you, scott. what do you believe is behind the poll? >> there are a couple of things. first let's put it in context. in the great depression, i wasn't polling back then but

37% thought next generation would be better off. so this 14% is horrific by comparison. the big part is the unrelenting troubled economy. we're at a point only 40%. four out of 10 americans, think the economy will get stronger five years from today. that too is the lowest level of optimism ever recorded. they don't think it makes much difference who wins the presidential election in terms of help the economy. there is a deep-seeded pessimism setting in. megyn: back in the great depression they knew it was bad but believed it would get better. today they know it is bad and they don't believe it is going to get much better. michael, when your dad took office we were also facing some very tough economic times. what was, how was he able to convince americans that even though things were rough they would get better and in fact they did? >> you've got to remember, here is an fdr democrat who became a republican, ronald reagan. it is all about leadership. whether it is fdr during the

depression, what have you, looking forward and speaking in a positive way, ronald reagan, 190, speaking in a positive light, going into 1990s. he had a great vision for america, a great vision for her people. we don't have that today. you can't really go back and find someone else that you can quote who is uplifting america, and uplifting the people of america. i remember my father sitting with tip o'neill when they were talking about the tax debate and tip o'neill went up to the white house and he came back as a supporter of ronald reagan's tax cuts. his staff said to tip, tip, how come you're on board with the president of united states? what did he say to you i went up to the white house, the president never mentioned taxes all night long. he talked about the greatness of america and the goodness of her people. before the end of the night i'm having a glass of wine with president and we're telling irish jokes and i'm on board with the president of united states of america. he never mentioned taxes. that was ronald reagan.

we don't have that optimism do anywhere in america. that's what we need. megyn: that bipartisanship seems gone, scott. congress didn't seem to be able to get anything done by the white house today. everyone is dug in. compromise is now a dirty word. people get on both sides the aisle and get upset thinking compromise means you're giving up your principles and your polling has reflected that for some time. >> sure. support for what congress is doing is in single digits. half of all americans think most members of congress are corrupt. it is because they're fighting partisan battles and fighting talking points and rather than issues and reaching out to that bigger promise of america. franklin roosevelt during the depression talked about how america how we would live up to our ideals and get through this. martin luther king, challenged america to live up to her ideals and part of the system rights movement and that is why he changed america and ronald reagan did the same thing. our nation will come back.

i'm an optimist. it might get worse before it gets better. but america will come back stronger than ever. it is a question when the politicians will recognize the american people are the strength of our system. megyn: we have rhetoric from both candidates in this presidential election, barack obama and mitt romney and yet there seems to be doubts in the minds of the american people whether they mean it and whether they're really effective at selling it. i don't think there is much question about whether your dad meant it and was good at selling it. michael reagan, take a listen to him at the republican national convention. 1984. >> the poet called miss liberty's torch the lamp beside the golden door. that was the entrance to america and it still is. and now you really know why we're here tonight. the glistening hope of that lamp is still ours. every promise, every opportunity is still golden in this land and through that golden door our children can walk into tomorrow with a knowledge

that no one can be denied the promise that is america. her heart is full, her door is still golden, her future bright. she has arms big enough to comfort and strong enough to support. but the strength in her arms is the strength of her people. she will carry on in the '80s unafraid, unashamed and unsurpassed. in this springtime of hope some lights seem eternal. america's is. thank you, god bless you and god bless the -- [cheers and applause] megyn: really moving. >> he goes on to win, you listen, he goes on to win all but one state, minnesota. and it is because of that optimism of ronald reagan. you didn't hear anywhere in that speech blaming anybody. he wasn't looking back saying this is his fault, this is his fault. he is looking forward and he was embracing america and her people, that they were going to move forward together, all of us together,

to make this a shining city on a hill. you do not have that in washington, d.c. you have the blame game. it is somebody else's fault. it is never my fault. until washington starts accepting the blame for where we are today, nothing is going to change. megyn: scott, you know, that president reagan's words, every promise, every opportunity is still golden in this land. >> right. megyn: you know, your poll suggests americans are not feeling that right now. >> they're not feeling it right now. i do think it's important to note that ronald reagan, not only conveyed that message but he did so after he delivered on some promises as president. it wasn't his campaign. it was the way he governed and the way he consistently lifted up our nation and its ideals and its people and that is something that is missing in politics today, from both sides of the aisle. megyn: you know it's funny, we do these segments with you, michael, a lot and we often use sound bites of your dad and people of all political stripes in the control room and newsroom and the studio and everybody

always comes out in front of the camera and watches it. the way he makes you feel when you hear him talk about our country is so uplifting. thank you both so much. >> it is. thank you. >> thank you. megyn: coming up next, she shattered the world record. she broke her own personal best by five seconds and she sparked an international uproar. now the teenage chinese swimming phenom is not only facing some claims that she may be doping but claims that her country may be genetically modifying its athletes. "kelly's court" is next with a surprise witness. >> not only does it shatter the women's record, shatters the men's and you wind up, having a hard time physiologically explaining it. as one swim coach said, it is almost insplek

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ye shiwen, winning the gold medal by knocking five seconds off her own personal best, shattering the world record and even outpacing in the last leg of the race the fastest male swimmer, the u.s. gold medal winwer, ryan lochte. she in her last leg beat the time he, the gold medal winner, got in his last leg of the race. now a u.s. coach is calling the 16-year-old girl's performance, unbelievable and disturbing, calling for an investigation, saying not only is doping a possibility but charging that the chinese may be genetically modifying their athletes. the international olympics committee coming to shiwen's defense, calling the claims nothing more than sour grapes. joining me now, joey jackson, former prosecutor, now defense attorney and julia more row, also former prosecutor and defense attorney. panel, welcome. this is getting kind of ugly as this man, john leonard is the u.s. executive director

of the world swimming coaches association calls it unbelievable, disturbing, wants an investigation into the chinese saying they could be using genetic manipulation, joey? >> she is a freak of nature. listen, there are a couple of things that concern me about this, megyn. the first are the facts. the second is the history. let's start with with the facts first. when you have a swimmer swimming five seconds better than her personal best, that beats the second place winner by three seconds, that outpaces the male winner, mr. lochte, by you know, i mean, in the last 50 meters of the race, it calls into question whether or not that is simply training. and i just want to be clear, in the event she is indeed won this on her own and merits i want to take nothing away but raises some skepticism. you match that, megyn with the history here. you look at 1994 in rome and issue that was had subsequently with the seven chinese swimmers there who were later found to be doping. you look at 1998 in perth. same thing with chinese athletes. more recently in 2008, 2009,

and then past june, where there were indications of cheating it raises serious concerns. megyn: julia, that is the problem for the chinese. if they had stellar history of no cheating people would more likely believe this girl achieved it on her own merit but they do not have a clean history and there is a question about whether this girl has gone you there the chinese swimming mill, which may or may not include genetic manipulation. >> you know, megyn, honestly i think that is really unfair to accuse a 16-year-old girl, who has worked so hard since she was a little kid, to be in competitive swimming and to just accuse her of cheating and being on drugs and doping and now going so far as to accuse her of being genetically engineered. what are they, injecting shark dna in her over in china? these allegations are ridiculous. she's awesome. she is a physical powerhouse. she has human flippers for feet, megyn.

she is 10 1/2 and only five feet. she rocked the race. and won. no evidence she did anything wrong, because she beat a man, lochte, all of sudden because she beat a man? give me a break. give her the props. she won. this is all speculation. >> i hope julia is right. megyn: the pat problem, all over the news what it is like, once you're young girl, shows any sort of athletic promise in china. let's just say, that is not what you want to have happen because they, wind up in these, you know, programs, run by the chinese government that are just brutal, brutal according to the reports and pictures too which we weren't allowed to show are really ugly what they put the girls through and boys too. but i want to talk about this allegation of genetic engineering and that brings us to our expert witness, dr. marc siegel, a member of our fox news medical a-team and professor at nyu's langone medical center. doctor, what sort of genetic

engineer something possible? >> megyn, first of all i want to talk about presumed innocent here too. i also think, you know, because she is girl, rather than a boy, this is somewhat sexist. i think all the presumptions, yes doping could be involved but they can also test her for steroids and they will with. so that question will be answered. megyn: but the tests always lag the drug evolution. >> but i also think, medically, any woman is capable of doing what any man can do. i have to tell you --. megyn: really. >> physician lodgic i think this is possible. now the other point you bring up about genetic engineering. i think this is still science fix. we've seen in mice several studies that show this is possible. megyn: how? >> you could genetically order a mouse to run through a is ma in much faster way to compete, maybe even swim but we're not up to do it. megyn: how would you do it? >> you splice in another gene. or you manipulate a gene to make a very powerful protein that stimulates a muscle. all of that is under investigation.

but it isery early and we're not seeing that in swimmers. that is pie-in-the-sky. we're seeing it in mice swimming. we're not seeing it in humans yet. megyn: stand by for a second, doc. joey, i don't even know how they would go about proving that in this case but they do, joey, have drug tested these athletes, if you win a medal they automatically test you. >> they do. listen, doctor, i'm with you in terms of if she won it fair and square then it is a beautiful thing. however there is a reason for performance-enhancing drugs and that is they enhance performance. that is why they test for it. that's why people take it because it gives them an edge. the real concern here, not that she is a woman, is what she was able to do. usually steps in competition, are incremental. we all may improve but improve slightly. when you beat your own best by five seconds, does it not, doctor, call into question whether or not you're taking something or doing something that might give you the edge? megyn: quick answer, dr. siegel in 10 seconds. >> i will give him a nod on this does call into question

supposedly has very thick muscles. this question is there but i still say presumed innocent. this is a question because why is she suddenly able to do that. megyn: julia will be able to get her chance to rehabilitate the swimmer with dr. siegel right after this break

megyn: julia morrow, do you want to take a shot at the doctor. >> yes, thank you, hi, doctor. >> how are you. >> good, how are you? it is my understanding that the first five finishers in any event are tested immediately when they tip ish while they're still at the venue. and, if in fact that is the case, is there any drug out there that you know of, performance-enhancing drug, that she, that ye could have taken that early after her, the event would not have been detected? and if so, what is the world anti-doping agency doing and

why aren't they on top of their game? >> i have to give you a very technical answer to that that goes in the opposite of your question. probably human growth hormone is something she would have taken that wouldn't come up right away. in fact anabolic steroids probably would. that is what everybody is thinking. i want to emphasize, i believe physician lodgic it is possible with rigorous training for this young woman to have performed at this level without any doping and i actually think that is what will come out here. i think we're way too cynical and we want to presume all the worse things. she could just be a tremendous athlete. megyn: i think it is come up mostly because of the chinese history. not necessarily that no one believes a young girl could accomplish such an amazing feat. i want to ask you, joey, there is a terrible history, in particular in swimming what they do, certain countries do to their athletes. there was story of a east german woman who astonished the world in 1980, swimming 400 meters and killed it.

sure enough later came out what her country done to irhad. they made her into a little swimming factory and genetically messed with her in terms of steroid injections and changed her look and her whole life. she wanted her records expunged because when she became an adult she was so horrified what happened. give the way china is run is there any way we get the truth about this young athlete? >> i'm hopeful with people like dr. siegel and others who have his medical training and background if there were drugs here they would be detected and discovered once and for all whether she won legitimately or to answer her critics questions whether or not she cheated. that is the critical question. we in lawyers deal in evidence. if she won fair and square, bless you. if she didn't it is problematic. i'm hopeful we'll be able to reach that determination. megyn: listen, if she did it, and did it without cheating amen to her. panel, thank you so much. >> thank you. megyn: bombshell developments on a growing scandal at the general

services administration. why one top lawmaker says the conference in vegas is just the tip of the iceberg a party?

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