responding to the factor. i'm bill o'reilly, we're definitely looking out for you. i'm megyn kelly, live in new york city. and tonight. just a bunch of lies? >> all of them were untrue. >> the second most powerful democrat in the country sets off a firestorm as he attacks the integrity of thousands of americans. his republican counterpart, senator mitch mcconnell is here to react. plus? president obama's actions have pushed executive power beyond all limits and created kb what has been characterize hissed as an uber-presidency. >> see what happened today when the white house took on executive orders. and new fallout for a soldier who went out of her way

not to salute the flag. plus? finder's keepers? the latest twist in the saga of the couple who made the greatest buried treasure find, right now on "the kelly file." and we begin tonight with breaking news, new reaction to the defeat of a controversial bill that reignited a national debate over where gay rights begin and religious freedom ends. good evening, everyone, i'm megyn kelly. there were celebrations outside of the areas state house in phoenix following days of protest. around 7:45, eastern tonight, governor jan brewer, vetoed the bill which would allow services to not serve gays and will hele under some circumstances, will now become law. >> i want you to know these are

challenged as never before. our society is undergoing many dramatic changes. however, i sincerely believe that senate bill 1062 has the potential to create more problems than it purports to solve. >> tony perkins is president of the family research foundation and one who argued in favor of the bill. tony, your reaction? >> well, disappointed. but not surprised. this is how we pass or defeat legislation in this country. we threaten to take away a super bowl or some sporting event and we pass all kinds of wild claims around. look, unfortunately, though, this is how fundamental freedoms are tropical stoampled. you create a fire storm with misinformation to the public, but when the dust settles, people in arizona are going to realize they were hoodwinked. 11 scholars sent a letter to the

governor saying look, these are people on both sides. don't believe what you're hearing, that is not what the law does. it is being completely misrepresented. >> how so? because the opponents of it said this would allow not just business owners who own restaurants or what have you to deny service to gays and lesbians, if they felt their religious beliefs required that and could prove their religious beliefs required that. but even an employer could do that if he was disagreeing with his employer on the matter. >> what kind of behavior do you think they could get away with, based on religion? i mean, what we're talking about here is an amendment to an existing law that has been in place since 1999. it simply is closing -- well, not really a loophole, but court interpretation. it was originally passed as when you were an individual and went into a business or marketplace, you don't lose your religious

freedoms, but some courts have interpreted that. but they also put in place a test that would prove, you have to prove you have the basis for your religious objection. >> a lot of people ignored that. you couldn't just go out and -- and make up a religious belief. let me ask you this, folks on the other side this is what this bill was, the modern-day equivalent of you can deny services of blacks who want to marry whites. blacks that used to get together, that used to be against the bible, against god's teaching. that was outlawed for three centuries and was not deemed illegal to do so to discriminate against blacks and whites who want to marry until 1867. and folks opposed to it said this is the modern-day equivalent to say you can refuse service to blacks and whites. >> i know that is what they

said, but they could do that now. there is no prohibition in most places, in most places, has it happened? no, people are not going to do that. we're talking about a piece of legislation that was being amended to address very specific problems, like we saw in new mexico. where a christian couple were asked to do the photography of a same-sex marriage wedding ceremony, they said we can't do it, we're christians. not only were they challenged, they used the force to take them to the supreme court which they lost because of the provision saying as a business you don't have a religious freedom protection. that is what this was trying to fix, this is going to continue to be a major problem and it will spread across the country. and i believe it is now going to be incumbent upon governor brewer, who says she is trying

to protect the religious freedoms of the country, what is she going to do now? >> we continue to see the religious freedom arguments up against the rights of gays and lesbians not to be discriminated against and we just not have reached a resolution on it. tony, thank you for coming on. >> well, who is going to answer -- who is going to protect the rights of christians and other religious people who don't want to be forced into this. that is the question that has to be answered. >> understood, tony, good to see you. also breaking tonight, the second most powerful democrat in washington has touched off a firestorm after he attacked the integrity of those americans who have dared to question obamacare. in the last hour, harry reid's remarks have been swift and fierce. first, listen for yourself to the senator. >> there are plenty of horror stories being told, all of them are untrue.

but in those tales, they turned out to be just that. tales. stories made up from lies, distorted by republicans to grab headlines or make political advertisements. >> senator reid seemed to attempt to backtrack a short time later but senate republicans were not having it. the gop releasing 100 cases describing americans pulled from a variety of news reports in recent weeks all of those who say have suffered very real and negative consequences thanks to obamacare. among the example, a 31-year-old kentucky dentist who went public after his new plan nearly doubled his premium and his out of pocket minimum. and a woman who was refused an answer on whether or not her son was covered under her new hamp just found out she is

not covered by the only obamacare in her state. and the new york woman, diagnosed with breast cancer, whose potentially life-threatening surgery has been postponed after she lost her insurance under obamacare. these stories and others have been coming to us from the npr and the associated press, from the network news cast and small papers around the country, not to mention those we brought to you directly. and senator reid suggesting all of these folks are lying to you. they're liars. earlier i spoke with republican senate minority leader mitch mcconnell. sir, good to see you tonight. this is rather extraordinary for him to come out and level that story, legions of stories just like the ones we just outlined. your thoughts on that. >> yeah, i was actually on the

floor when he said that. he basically called my constituent, angela from owensboro, he basically called her a liar, what knononsense. these people across america, who are losing their insurance, whose jobs are being lost, are not making this up. and no amount of harry reid calling everybody a liar changes the facts. why in the world would people call us with these stories if they're not true? >> is there some greater level of decorum expected of the senate majority leader? this is the most powerful man in the u.s. senate. and he is basically calling any american who talked about their experiences under obamacare liars. >> well, i mean -- certainly it is unacceptable rhetoric, particularly when it is obviously not true. i mean, how in the world could republicans organize all of

these constituents all across america to make stories up and send them to us? that is nonsense. >> here is what i'm getting at. you remember the infamous incident in which congressman joe wilson called president obama a liar, he said "you lie." and many said he shouldn't have done that and he is out of order. now you have the senate majority leader calling all of these regular americans who just happen to be speaking out about their negative experiences as it happens, liars. doesn't he have an obligation of decorum, in the same way that joe wilson had and breached it? >> he called president bush a liar two years ago, he must think that everybody who disagrees with him a liar. it is astonishing behavior, certainly doesn't lend credibility to the man who is

supposed to be the most senior man in the majority. i think it further underscores their desperation. they're desperate because every single one of them who passed obamacare has been a disaster for the country and they're afraid there will be a price for it later this november. >> he came out later and said i can't say that every one of the koch brothers ads are a lie, and he was trying to make it sound like it was the koch brothers only. but a vast majority of them are, it is just the evil brothers, they lie, he went on to talk about julie boonstra, a leukemia patient, has gone through a lot thanks to the law all of which she detailed. "the washington post" gave her two pinocchios.

he came out and said that leukemia patient, everybody sympathizes with her struggle, but it does not make it true. will this have a chilling effect on other americans who just want to come out and tell their stories? >> i don't think so, i think people are just going to be twice as angry about it. and the senate majority leader calling them a liar, is just going to make them want to come out and tell their story. these tragic stories are occurring all over the country. we hear about them every day. and i don't think they're going to be cymbidiintimidated by har. >> you know, this is not the only incident of intimidation, we have been covering, and i know you have been following closely the deal with the irs. the new rule they would have, would solve all the problems, basically it would codify the targeting of conservatives that got them into trouble in the

first place. well, the rule is opened up for comment. the public comment period is now closing. and where do we stand? is this controversial new rule likely to take effect? >> megyn, 100,000 comments, hundred thousand, just to put it in perspective. there were 700 comments on the keystone pipeline. we know what the administration is doing. they're trying to turn the commissioner of the irs a p political hack to go out and quiet the voices of the critics of the administration, but interestingly enough, a lot of people are complaining, as well. the aclu, the labor groups, they're complaining as well because they're taking a look at the regulation and realizing they're going to be collateral damage for the administration's attempt to quiet the voices of its critics. >> so what is going to happen? >> well, i hope the commissioner of the irs will do what they did

back in the nixon administration, they tried to get them to go after the political enemies. the new irs commissioner should say no to the white house, no to the irs, we're not going to let you target your political enemies. >> also developing on this busy night. new fallout for the soldier who went out of her way in a refusal to salute the flag. and then? she invoked her right to remain silent last time she was asked to testify. >> after very careful consideration i have decided to follow my counsel's advice and not testify or answer any of the questions today. >> tonight, the new twist in the effort to get the truth from the woman at the heart of the irs controversy. plus, only enforce the laws you like? next up, a republican attorney general reacts to the new controversy over eric holder's advice to ignore the law, only on "the kelly file."

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sir, good to see you. mr. holder tried to tell the state attorney generals to do what he did at the state level, when they said hey, the defense of marriage act, we don't see any way it could be constitutional. so if you find the same thing in your law you could do what we d did, your thoughts. >> exactly, he just inserted his judgment into the rule of law. and it is really astounding. and certain judges, you could have heard their jaw drop when the attorney general said we think it is unconstitutional so you should just ignore the law. we took an oath to uphold the law, that is our system, our duty, all of our freedom and our civil liberties depends on that being upheld. no the attorney general to come in and say this is not constitutional, you should really just not enforce it. really overodes the rule of law

>> why should we have them elect the legislature? who cares what they think? you can just trump what eric holder said. >> it is not the rule of barack obama, or eric holder, this is the rule of law. issues come and go, megyn, we'll have another attorney general some day. we'll have another president. there will be another controversial issue. and if the attorney general feels like he can just make a declaration by whim that he is determined without a court resolution that something is unconstitutional, we're setting off on a very dangerous path. >> here is what i want to ask you, this is him trying to defend his statement to "the new york times." he cited the brown versus education, if i were attorney general in kansas in 1953 i would not have listened to a law

that said separate but equal. and it turned out that they said yeah, you're right, that is not unconstitutional. >> well, we don't have time machines or crystal ballings. the beauty of the law is we have each side that has the duty to represent their sides, if somebody objects to the law he can go to court and contest it. did we get a final resolution? and one thing that is so ironic, if the california attorney general who refused to uphold the law had actually done her duty and defended the law her citizens passed we may be sitting here today with a law that the united states supreme court, that we would be all bound to follow. >> in the gay marriage case. what they're doing is each state attorney general is advocating their responsibility to defend

the laws and the laws get challenged and there is nobody there to defend it. so surprised when they get struck down. good to see you. and things got tense on capitol hill when the president took on the use of executive power. we have that just ahead. plus, see what happens when your eyes really are unique. in fact, they depend on a unique set of nutrients. [ male announcer ] that's why there's ocuvite to help protect yr eye health. as yoage, your eyes can lose vital nutrients. ocuvite helps replenish key eye nutrients. ocuvite is a vitamin made just for youeyes from the eye care experts at bausch + lomb. ocuvite has a unique formula that's just not found in any leading multivitamin. your ey are unique, so hp protect your eye health with ocuvite. but we're not staying in the kitchen. just start the slow cooker, add meat and pour in campbell's slow oker sauce. by the time you get home, dinner is practically done. and absolutely delicious.

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lois ar but you know that in every account, by helping them into a chair, listening to them, all of those are opportunities. christ is really living in them. and then we bring christ to them in ourselves, and it is the final moment, when you know they got into the hands of god you know they were there.

it's incredible. >> well, we promise you an update on the legal battle pinning the united states government against the women you just saw, nuns, who have devoted their lives to helping the least of these, the little sisters of the poor launched a full appeal this week asking the tenth circuit court of appeals to protect their religious freedoms so they're not forced to provide contraception to their insurers. last night i spoke to the senior counsel for the nuns and asked him what is going on right now? >> so we're asking the court of appeals to give us longer-lasting relief. you will remember at new year's eve, just sotomayer, gave them a temporary injunction, and the government extended that. the government could have and should have walked away at that point, so now we're asking for the court of appeals to let them

get back to helping the poor. >> so the obama administration is not backing down that the nuns should just sign the form that will allow to contraception to be delivered by somebody else? >> yeah, and really strange about the government's argument, it says the form means nothing. yet the federal government is fighting them all the way saying sisters you better sign that form or we'll take the millions that people have given to care for the poor and give it to the irs. that makes no sense at all. >> how are the nuns broiled in a national controversy? >> they don't like it. they don't have that as their mission. their mission was to care for the elderly or the poor. but they were put in that position to say basically, the sisters will yield and if they don't we'll take 40% of their budget as fine money because the sisters insist on following the catholic faith that animates their work. >> how do you like your chances

at the court of appeals. >> the government lost 20% of these cases. their argument is really weak. even the government says there is no point in making the sisters sign the form. that is not their view, they believe the form matters but even if the government is coming in and saying this doesn't matter then it is really sen senseless for the administration to say the nuns are going to sign it or we'll crush them with fines. >> good to see you. and coming up, former irs official lois lerner recalled to testify about the conservative groups. her lawyer saying she will do it. but there is a catch. and up next, the soldier who went out of her way refusing to salute the flag. salute the flag. and go to ourintroducing olive's pronto lunch starting at $6.99. an entirely new menu created with your busy schedule in mind.

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from the world headquarters of fox news, it's "the kelly file" with megyn kelly. a photo posted on the social media website instagram is causing a lot of angry reaction. trace gallagher has the story, trace? >> reporter: at fort carson, every night at 5:00, megyn, a flag salute happens that takes about a minute. well, this private decided she was going to skip the salute and then document it and publicize it posting this selfie on instagram quoting here, saying this is me laying back in my car hiding so i don't have to salute the 1700 flag, keep your disrespectful comments to yourself right now, because right now i don't give a f.

well, then, she decided to double down on this selfie saying your tax dollars allow me to sit in my car all day, respect the nation, though, do what you want with the uniform, laugh out loud. it all went viral and quickly generated outrage and even racist comments on line. sheffey responded saying i seriously want to say thank you to everybody who stood up to me today. like seriously, that s word to me was not that serious. i'm not a disrespectful soldier and i really appreciate you all. fort carson responded by saying this. listen. >> customs and courtesies are a part of the soldier's every day life, whether they're on duty, off duty, in uniform or out. so we expect them to maintain and uphold the customs and courtesies that they have been taught throughout their career. >> the base also says they want to hear private sheffey's side

of this debate before they figure out if there will be any punishment or not. megyn? >> all right, well, still taking our viewer's thoughts on facebook tonight. trace, thank you. again, go to facebook.com/thekellyfile. tell us what you think about private s hadheffey. and we have an exclusive update after the house judiciary committee tries to figure out what it can do about the president's continued use of executive authority. and while some lawmakers have gone so far as to propose suing the white house, some of their colleagues and even some of their witnesses they heard from today suggested the solution or the blame depending on how you look at it may lie with congress itself. >> it is a political feeder. >> what we have here is another do-nothing hearing in the do-nothing congress which will

arrive at do-nothing legislation. >> i raise the question of frivolity, legislative milk toa toast. >> recently, congress has seemed frankly feckless and uncertain as to its authority. and for congress not to act, borders on self-loathing. >> if you want to stay relevant as an institution i would suggest you don't sit by and let the president take your authority. >> what do you make of the criticisms of congress that we just heard from the left and right alike? >> well, first of all it is very disturbing that those in the congress don't recognize that they need to stand with those of us who want to take action to make sure that the separation of powers are upheld and that congress does have its authority protected, which is very clear in our constitution. you know, we held a hearing back in december. we had four witnesses's including mr. turley, who we brought back again this week.

>> an obama supporter. >> that is right, in fact, three of the four witnesses had voted for barack obama. and two of those three plus the other three all said the president was exceeding his authority. we got a very good reaction for the congress finally, pointing this out, taking a strong stand, and now we came back with a hearing to talk about solutions. >> but this is what you're up against, you say why won't they stand with you? not only will they not stand with you, they're standing for the president as he stands in front of them and tells them that he is going to usurp your authority. there was a moment at the state of the union where he said i'm going to go around you to get my agenda pushed through, i have my pen and phone and will do it by executive action. and look at the democrats on their feet cheering his announcement that he will bypass them. that is what you're up against, sir. >> that is exactly right. not the first time he said it. two state of the unions ago, he

said if congress will not act i will. and these have not been idle proclamations. he has gone around the congress on law, criminal law, health care law, most classical there, where he is not only not enforced the law but he has essentially rewritten the law by saying people, employees between 50 and 99, they get special treatment against somebody who has 100 employees. >> jonathan turley, by any standard he is a liberal. a progressive guy. but he has been very critical of president obama's executive overreaches. he and others, it does not just come down to turley but he is the best known, i think. he came out and quoted, we are in the midst of a constitutional crisis right now with sweeping

implications of our government. do you believe it is really to big, that serious? >> i do, it didn't just start with obama. there are previous properesiden and congresses that have exceeded authority. but this president has gone beyond even what congress has given him and even beyond what previous presidents have done. and it is important we exercise the tools in the constitution to check the power. one of those tools that is not utilized enough is to bring a lawsuit against the administration when they are not enforcing the law. but the courts have historically been very loathe to interject themselves into what they call two disputes between a political branch of the government. but it is not a dispute. it is what congress says in article one, and the president's

duty in article two to faithfully execute it. >> i got it. i need a quick answer, i'm out of time, what about the charges, you guys are feckless that luis gutierrez said this is a do-nothing congress, and will result in do-nothing legislation. i think some of the democrats and republicans watching this may agree with it. >> you bet, that is why we'll be coming forward with. we had a panel of four different legislations. we'll be coming through here with different legislations quickly to address it and bring it to the floor of the house. but it is also important that democrats and republicans understand that this is about protecting the people's institution, the most direct democracy that we have where we have 535 house members and senators who have a duty to carry out the writing of the laws in the country. and if we don't stand together when the executive branch usurps that authority then we'll pay the price we're paying right

now. >> judging that from picture from the state of the union where they are cheering his announcement that he will bypass all of you, very telling. good to see you. >> thank you, megyn, good to see you. coming up, she pled the fifth and walked away. but lois lerner has been recalled to testify next week. her lawyer is mad but said look, she will do it with a catch. we'll tell you about it next. i ys say be thman with the plan but with less ergy, moodiness, i had to do something. i saw mdoctor. a blood test showed it was low testosterone, not age. we talked about axiron the onlynderarm low t treaent that can restore t vels to normal in about two weeks in most men. axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. women, especlly those who are or who may become pregnant, and children should avoidt where axirons applied as unexpected signs of puberty in children or changes in body hair or incased acne in women may occur. report these symptoms to your doctor. tell your doctorbout all

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a former irs official, lois lerner has been recalled now by the house oversight and government reform committee to testify next week about the irs scandal and their targeting the conservative groups. but if you listen to some of the democrats in washington, the woman, who had to plead the fifth is not the real source of the problem here. instead, they're blaming -- well, watch. >> we have all heard the outrage and the innuendo from my republican colleagues and their chief mouthpiece, fox news. political theater crafted to make the producers at fox television happy. >> silencing your critics is common place in these countries,

when they speak out they need to know they can speak out without being worried what is happening to them. >> encouraging speech, that is what makes us strong as a nation, yet here comes the irs, trying to shut down and use the heavy hammer of their power to try to shut down the political speech of police who disagree with them. >> joining me now, brent bazzel, before i ask you, producers, are you feeling happy? a little happy. this is so ridiculous, brent, there they go again. it is all fox news's fault, nothing to do with lois lerner who pled the fifth or anybody else at the irs or this story. >> megyn, just jotting down from memo memory, things i remember about the scandal. it is by no means the complete story. we now know there were hundreds of cases where the irs was

persecuting conservative organizati organizations. so much so that the president said he was outraged. like the benghazi video, they tried to blame two agents in cincinnati and that was not true. we know there were hundreds of meeting at the white house with irs officials but we don't know that they discussed any of this. we know that it goes up at least to an obama official who was in charge of oversight who was getting reports on this. we know that the irs was colluding with the government and other agencies. we know that the irs was leaking information about conservative groups like the national council of marriage, two left-wing organizations, which was illegal. we know that dr. ben carson spoke at the national prayer breakfast and was critical of obama and was overnight hit with an audit. they targeted the "friends of

abe," a hollywood organization. we know the person in charge of this investigation was an obama donor. and it was a clear conflict. and we know that lois lerner, would testify if she was given immunity from prosecution. and these liberals are saying there was not a scandal? where is the rest of the press? where is anyone covering this. just to give you an understanding of this since june 26th of last year, the total amount of time abc news has given to what i just told you 22 seconds. >> wow. that is unbelievable, brent. i mean, that is literally unbelievable. is that documented? >> it is documented, when the friends -- when the friends of abe was targeted, zero seconds to that story. but 36 minutes that day to

justin bieber's arrest. >> oh, goodness gracious. you know, that is why the president can come out and say to bill o'reilly there is not a smidgen of corruption at the irs and gets a complete pass from most media outlets. and when it is covered here on fox the reaction from capitol hill is that the republican mouthpieces. why don't they also want to know why the president said that when he has an open fbi probe into this matter? >> it is why president obama says there is no scandals because he knows he will not be called out on this. it is why harry reid as you so correctly reported tonight was lying when he just dismissed every argument about obamacare. every story about obamacare as being a lie. why do they do this? because they feel they can. because nobody but fox is going to cover this and they turn around and attack fox. >> and not just attack fox, now it has crossed over to a

different place. now you have harry reid as you just pointed out, calling the testimonials of americans, cancer patients, saying they're all liars. and then you heard the folks in the sound bite saying this is a question about people getting worried about what will happen to them if they speak out against their government. because the government then punches back and most of the media ignores that. >> people are -- megyn, people are scared to death that if they criticize this president they will be targeted and they will be ruined by the irs. why are they scared to death? because it is happening right before our very eyes. and there are hundreds of examples of it. >> brent, thank you for being here. >> thank you, megyn. >> up next, a new twist in the story of the couple who found what is being called the greatest american treasure ever of t . wow, that is next. [ male announcer ] did you know

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it is being called the greatest treasure ever found in america. a california couple, finding gold coins buried in their yard. william la jeunesse has more on this story. >> reporter: well, megyn, of all the stories of pirates, lost minds and missing loot, experts say this is the greatest treasure ever buried in north america. it is big, it is expensive, and the coins are in mint condition. now, the couple on a walk on their northern california property found a can.

they found one rusty can and then seven million filled with 1400 perfectly preserved gold coins, dating back from the 1840s to the 1890s. wanting to avoid treasure hunters and scam artists, the couple stayed anonymous but their find has not. valued at $10 million, experts say one coin is valued at a million. >> better than anything in a private collection, better than anything in a museum. it is as good as it gets. and it is one of the great rarities of the 20-dollar gold piece series. >> now, the couple did not ruin the coins' value by cleaning them, but instead buried them in a wood pile in the back yard until the experts could do their jobs. >> some of these are the finest you will ever see, and it is not just the coins.

i've done this for a long time. but it's the story. >> the most valuable coin is a $20 gold piece from 1886, the first year, in god we trust, was added to u.s. money. back then experts say coins were often buried in the back yard or underground, which was safer than a bank which could not be trusted to stay in business. megyn, back to you. >> unbelievable, the only thing i ever find when i'm walking is a bunch of dog -- you know. no coins. in new york, some garbage. where do they live? what? anyway, let me know what you think. what is the most exciting thing you have ever found while walking outside your dog or otherwise? let me know, follow me on twitter @megynkelly, send me a tweet and go to our facebook page @megakelly/thekellyfile.

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pope francis meets his mini me, but it doesn't exactly go smoothly. check it out. the child decked out for carnival when he gets to meet his holiness. but as the child reaches up to get a kiss he starts to wail. here is an even better look. later the little guy was smiling around st. peter's square. look at him. how sweet. his family says the costume was meant to be a gesture of love toward the holy father. but you know even when you meet the holy father they're still children. that is funny. now, that is a nice story. some are throwing hooey cards to the people who found 10 million. most interesting, somebody said five bucks in the attic, offered

it back to the old woman, but she said keep it. a lot of people say they found $20 and a lot of people found walking their dogs exactly what i found in new york city. thank you for joining us, i'm megyn kelly. this is "the kelly file".file.. welcome to "hannity" tonight, we have a jam-packed edition of the show. ted cruz is in the house, america, are you ready? let's roll. the road to republican victory in 2014. >> republicans are going to take the u.s. senate. >> ted cruz and karl rove are here with their analysis. >> we shall pay any price. >> behind all the numbers lies america's ability to prevent the greatest of human tragedies and preserve our free way of life in a sometimes dangerous world. >> a strong military has been the corner stone of presidential policies for