is sunday night at 10:00 p.m. everybody. the obama recovery goes backwards. the economy contracts in the first three months of the year. so now what? this is "special report." good evening. welcome to washington. i'm bret baier. as the headlines scream of one foreign policy challenge after another, president obama is heading into the weekend with another domestic problem on his hands. the economy is going backwards. the gross domestic product, the gdp, fell from january through march, its worst performance in a year. correspondent kevin corke has reaction from the white house. >> reporter: it's no big deal. that's how the administration

casts today's revision of the gross domestic product. >> the first quarter is not something unexpected given the severity of the winter given the fact that we had the west coast ports that slowed down which affected inventory. >> reporter: the commerce department now says gdp sharank by 0.7%. and first-quarter underperformance has tended to increase over the past ten years in parallel with the intensifying winter weather. today's contraction was the third since the country's recession. that says more about the economic policy not a rough winter, say some. >> we are growing at stall speed. we're growing at 2% because of the choices that both the administration made and the federal reserve made. >> reporter: politically speaking this means less to the

current occupant of the white house than it does for those who would like to live there after the 2016 election. the latest fox news survey asks voters if it felt like the recession was over. fewer than 4 in 10 thought so an online skepticism that could hurt democrats. >> if people are seeing that the economy is weakening, then it becomes more difficult for the incumbent white house party to win that third term. >> reporter: the first quarter malaise fired up marco rubio who said today, quote, the american economy will never reach its full potential so long as we have policies stuck in the past. a past that includes hillary clinton, who has challenged the president's economic policies on the campaign trail. >> this may be another reason why she's not answering questions. but when she does boast about the obama administration it screams if the economy is weakening or signs that cost citizens to question whether the economy is stable. >> reporter: it was interesting to hear the white house refer to

the transpacific partnership as an example of something they feel like can keep the economy moving like expanding more markets but it's important to point out, it's democrats like senator elizabeth warren for example, that are fighting the white house on that. >> kevin corke live on the north lawn thank you. stocks were off today. the dow lost 115 and s&p was down 13 and nasdaq dropped 28. the dow lost 1.25 percentage points and nasdaq down 9/10 and nasdaq down a third. key government surveillance programs will be kept in place. those provisions expire on sunday at midnight. >> i don't want us to be in a position where those authorities go away and suddenly we're dark and heaven forbid we've got a

problem where we could have prevented a terrorist attack or apprehended someone who has engaged in dangerous activity but we didn't do so simply because of inaction in the senate. >> senators will reconvene on sunday to resume debate on the patriot act provisions. the isis rampage in iraq continues. the terror group is claiming responsibility where 15 people were killed. president obama's inability to either degrade or destroy isis as promised is becoming a major point for republicans lining up to try to replace him. political correspondent carl cameron has that story tonight. >> reporter: 2016 will be fourth presidential race in a row where american forces battling islamic terrorism and divides both parties. most republicans blame president obama's with withdrawal from iraq in 2011.

>> if you fought in iraq it worked. it's not your fault it's going to hell. it's obama's fault. >> this whole problem with isis in syria begins with what he did not do what he promised to be able to take out assad if he used chemical weapons. this destroys the american credibility around the world. >> reporter: fellow republicans, kentucky senator rand paul claims the gop inadvertently helped isis flourish. >> isis grew stronger because of the hawks in our country and most were snatched up by isis. they created these people. >> it's just a fable. if isis came in to being after al qaeda in iraq was defeated by the iraqi army and as president obama himself said when he came into office he inherited a

stable iraq. isis is the creation that happened after we pulled all of our troops out in 2011. that is the key mistake that was made by this administration. >> i think the senator is unsuited to become commander in chief. we can't afford four more years of a misunderstanding of the threat. >> hillary clinton is in the blame game, too. >> madam secretary, would you have pulled the troops out of iraq in 2011? clinton may be on the verge of breaking with the president and adopting a more hawk erb strategy against isis. the center for a new american security a think tank clinton helped launch a few years ago, issued seven policy papers yesterday that call upon ate proech a failure and calls foreground troops which the president opposes. clinton has been heading to the left lately. on the other hand backing foreign national security policies that do not work puts a

lot more than books at risk. bret? >> carl, thank you. a new clintonian twist. former president bill will build a group trying to help tsunami victims in exchange for a public you a appearance. that's the latest example of the latest unease about what to do about bill. >> reporter: one day after top aides to hillary clinton insisted the stories about former president bill clinton for doing no major damage to her campaign democrat nancy pelosi suggested otherwise, declaring both clintons will have to deal with troubles at the family's foundation after new revelation about a possible quid pro quo. >> it raises questions that they'll have to answer. >> "the new york times" reported that after turning down two

invitations, bill clinton accepted a lifetime achievement award in june 2014 after the group gave the clinton foundation $500,000. >> she could get a real medal, well-deserved for just doing what she did in the tsunami area. >> he lavished praised and a czech model who survived the 2004 tsunami and wanted to give back yet in this case he could have built ten preschools in indonesia. >> the clinton also have to answer for the foundation but i would imagine that president clinton's participation in that event increased the money spent at the foundation for a very good cause. >> reporter: but a fundraising expert at columbia university noted the times that bill clinton was, quote, riding the back of this small charity for, what $500,000? i find it -- what would be the

word -- distasteful. ramping unforeign assistance for those who gave to the cloibt foundation. campaign officials say both clintons have a great story to say about philanthropy. although they added, bill clinton will not be doing any campaign events for a few months. other than hillary clinton's first rally, june 13th which will be the first appearance of the former president since her announcement video he was also left out of. former governor martin o'malley strung on his guitar the song "hail to the chief." modeling a t-shirt now for sale on their website. >> perhaps t-shirt sales have

been good but question but not for lack of an earlier enthusiasm. they are stepping it up to keep up with republican fundraising, which has been doing very well, bret. >> ed, thank you. former rhode island republican senator and then independent governor, lincoln chafee is planning to run as a democrat. he is expected to make the announcement next wednesday. he was the only one in the senate to vote against the iraq war in 2003. a man second in line to the presidency for eight years and jaw-dropping allegations. first, fox 10 in phoenix, police are bracing for trouble ahead of tonight's free speech rally outside of an islamic mosque. it will include a prophet muhammad cartoon contest. security will be heavy following a shooting at a similar event in texas earlier this month. fox 26 in houston where the death toll rises in the texas

flooding disaster. an 87-year-old man was swept away after a failed rescue attempt in dallas. a police officer had to be rescued from atop of his patrol car, as you can see here. he got a lift from a helicopter. and this is a live look at new york from our affiliate fox 5. the big story there tonight, the opening of the one world trade center observatory. elevators take visitors to the public viewing space on the 100th floor in just one minute. you can see the skyline to the atlantic ocean. that's

the longest-serving republican house speaker ever may be on the wrong end of a judge's gavel soon.

dennis hastert has been on the other end of serious charges. here are the disturbing allegations. >> reporter: several newspapers claim what was defined as prior misconduct by the former speaker of the house dennis hastert was sexual abuse of a man. anyone who knows denny is shocked and confused by the recent news. opponents are left without much to say. >> there's nobody here who derives any pleasure from reading about the former speaker's legal troubles at this point. >> reporter: the indictment says hastert paid cash to someone known as individual a. this goes back to before politics when he was a teacher wrestling wrestling in illinois. the former speaker in november was on c-span. >> do you remember me from

yorkville? >> go ahead. >> according to the indictment hastert and individual a met after hastert left office. he agreed to pay hush money and paid in $50,000 increments. then after questions were made he started paying in $10,000. when questioned by the fbi, hastert said he was keeping the cash because he didn't trust the banks. yeah i kept the cash. that's what i'm doing, the indictment quotes him. in 2006 hastert and his aides were accused of dragging their feet even covering up after being made aware that florida congressman mark foley was accused of sending explicit messages to young male aides. hastert said then -- >> as a parent and speaker of the house, i am disgusted that congressman foley broke that trust. anyone who had knowledge of these instant messages should have turned them over to authority immediately so that

the kids could be protected. >> reporter: the felony charges are lying to the fbi, structuring transactions to evade reporting, each carrying $250,000 fine and five years in prison. bret, back to you. >> mike tobin, thank you. several commercial pilots over long island last night reported that someone was pointing a laser at the planes. the the faa and police are investigating. three of the planes targeted had just taken off from kennedy airport. the green light shining in the cockpit can make it nearly impossible for pilots to see the controls. journalists are theoretically impartial, although many people question that assumption. but some bias is much more in your face than others. that brings us to hillary clinton and women's magazines. fox news media analyst and host of "media buzz" howard kurtz has some observations. howard? >> good evening, bret.

women magazines have long treated hillary like royalty. here she is on "vogue" two years ago. "elle" magazine just put chelsea clinton on the magazine. and seymour said she didn't see a conflict because she doesn't work for a news organization. i haven't seen any qualms or carly fiorina. "women are tired of hearing about how to be a feminist from media on the left and being told that hillary is the only option." >> how much effect does this have on the clinton foundation?

>> back in 2008 blacks gave a boost to president obama and these women magazines, bret have millions of readers. when marie claire declares, "the new hillary isn't cold she's cool," that certainly doesn't hurt. >> howard kurtz, thank you. a democratic candidate is trying to explain comments about sexual fantasies that have a lot of people shaking their heads. first, history in the making and how it's being received. a big step towards the normalization of relations between the u.s.

the normalization of

relations between the u.s. and cuba is a topic tonight. cuba has been removed from an infamous lift. >> reporter: president obama's aides announced the end for cuba on the list and the white house says that's not a done deal. >> there was important progress that was made. >> reporter: congress had 45 days to mention the listing. john kerry certified that cuba has not supported terrorism for at least six months and said that it will not do so going forward. one consequence is that the u.s. will no longer automatically move to block loans to cuba from the world bank or imf. >> separately there are the cuban assets control regulations and those will continue to prohibit most transactions involving cuba or a cuban

national. >> reporter: former florida governor jeb bush a likely republican candidate called today's news further evidence that president obama seems more interested in capitulating to our adversaries than in controlling them. another gop contender blasting them with chris christie who demands that cuba return the woman who killed a trooper and has lived freely in cuba for three decades. >> this is a travesty, unconscienceable. >> reporter: joe connor has also asked cuba return another fugitive della morales, the puerto rican group that terrorized new york in the 1970s, including a bombing in manhattan that killed four people.

>> they've been sponsoring terrorists for decades. there is no other way they can live in cuba. >> reporter: state department officials say the remaining obstacles could be worked out between the two countries without the need for another formal round of talks but congress could intervene, perhaps by defunding the operations of such an embassy or by blocking the nomination of another ambassador. >> james rosen thank you. fox news has been told that the pentagon's second in command, bob work is ordering an investigation into the mishandling of anthrax spores. live ones instead of dead ones were sent to labs in nine states and south korea. the samples were also sent to a lab in australia in 2008. the death toll from india's

week-long heatwave has eclipsed 1800. temperatures hovering around 109 degrees will continue for at least two more days there. leaders of global soccer have re-elected sepp blatter. he was not among those implicated in the fifa investigation but critics have called on him to resign. talk about a prison break, folks in detroit can't get out from under construction costs for a new one even though they've stopped construction. the grapevine is next.

and now some fresh pickings from the political grapevine. a detroit prison became too expensive to complete so construction has halted but it's still costing taxpayers $1 million a month not to be worked on. that includes upkeep security off-site storage for jail cells, adding up all to $1.2 million a month. critics want to pull the plug. quote, at this point, the only thing we should do is cut our losses. if someone is willing to purchase it we should sell it. multiple parties have expressed

interest in buying the property but no agreement has been reached. county officials want to wait until the current financial crisis is solved then look at available options. while they wait the meter is running. a follow up to monday's story about students being excluded from a queens carnival because the parents did not pay $10 while the school made a profit of $3,000. mayor bill de blasio calls this unconscienceable. the principal says i'm in the business for over 25 years and always put the kids first. if i had known that some kids were not allowed to attend that carnival i would have paid for them. finally, eye for an eye justice is making a comeback at least in ohio. an assault suspect who pepper sprayed someone in the face was given a choice. 30 days in jail or be pepper sprayed by her victim.

she chose the latter. but harmless saline was used without the suspect knowing the switch had been made. the judge said the motivation is simple. "i do whatever i think will prevent a person from coming back in the courts again." a political candidate is being haunted by his own words tonight about a very sensitive subject. democrat tech presidential hopeful bernie sanders is trying to explain away some bizarre comments about sexual fantasies involving a republican candidate in office. our correspondent has more on that. >> reporter: dumb dark satire and stupid. that's what his own campaign says about an essay bernie sanders describes as the typical rape fantasies of a heterosexual couple. "mother jones" unearthed this

piece. a man fantasized about a woman tied and abused the woman about three men raping her simultaneously. sanders says, the point, men and women adapt themselves. >> liberal has to be exploding everywhere. >> reporter: during the 2012 campaign liberals dubbed gop the party of rape as reporters relentlessly represented todd aiken and his claims that if a woman was the victim of a legitimate rape, her body can shut down the reproductive system. a pregnancy the results of rape is god's plan. sanders' defenders say there's a clear difference between those comments and what their candidate wrote 42 years ago. in a statement, the sanders' spokesman said this was a dumb

attempt to attack gender stereotypes in the 1970s and it looks as stupid today as it was then. >> if we tried to shame bernie sanders out of public life because he thought something stupid about gender roles 40 years ago, the standard for who gets to be a public serve vaptant is pretty terrible. >> the vermont senator is well behind former secretary of state hillary in a recent poll. bret? >> thanks. let me know on facebook.com/bretbaier or on twitter. @bretbaierspecialreport. republicans are pouncing. the panel, the casino. there's a lot. straight ahead.

hi i'm greg gutfeld. i have a brand-new show premiering on sunday night at 10:00 p.m. joining me is george clooney, tom hanks and brad pitt. never mind. just going to be me. th

this may be another reason that they are not answering questions. when she does boast about the obama administration it screams crudulity if there are signs that causes question whether the economy is stable. absolutely it hurts hillary clinton and it hurts president obama and democrats generally. >> talking about the economy and the revision of the gross domestic product, the gdp came out today from the congress department that it shrank by .7% annual rate in the first quarter. most analysts expected it to be

bad but this is not a good sign for the economy. and speaking of that the latest polls for your family does it feel like the recession is over? take a look at this poll. still in recession. the recession is over. president obama on the economy does a little better. still upside down. approve, disapprove. let's start there. let's bring in our panel. nina easton, eddie walter and syndicated columnist charles krauthammer. the administration says it was a severe winter. they always say something about that about the first quarter. >> yes. >> politically, what does this number mean? >> a couple things. it's not a good number obviously. it's the third time that we've had a downturn since the recession. but there are good signs in the economy. incomes are up. housing is turning around. and the thing to remember politically -- and i remember this so well from 2012 when i

taught a class. it's the economy, stupid. it's about the trend line on the economy. is it getting worse or getting better? and there's a long time between now and next november for people to feel like it's getting worse or it's getting better. >> but anecdotally, there's still a lot of money that is off on the sidelines. companies are still stockpiling cash. and while there is some churning going on it doesn't seem like it's taken off. >> well people are still not feeling confident about the economy. the trajectory and the economy, they are not feeling good personally. there's a sense that we are sort of stuck. i hear that over and over again when you talk to voters that we are stuck. but i think nina is exactly right. it's a good thing for democrats that it's happening this quarter, not in 2016. but, you know the other issue is too, we have an economy that really hasn't been growing at the pace that it was in the '80s and '90s. we have a 21st century economy

that has a 21st century problem. growth has averaged 8.1% since 2001. >> so this is the new normal? >> this is the new normal and we don't have politicians putting policies forward that deal with this. we're still talking about programs that we were talking about in the '30s and '60s and the '80s. >> obviously the federal reserve factors into all of this how fed policy has buoyed this economy but also changed how it works. >> but the fed policy makes this even worse. you've got the fed with the foot on the pedal but it's been there for six years, zero interest rates, historically unprecedented. some countries in europe had negative interest rates. fiscally the congress even though obama boasts about reducing the deficit, it's still half a trillion dollars a year which is off the charts and you still have the weakest recovery since the second world war. you still have a growth rate

that averages about 2%. i love the way administration immediately says well you know the way that we calibrate the growth numbers from season to season and then of course it was a shocking act of god which is known as winter. every time there's a slow down it's because, well it does happen between january and march. and it doesn't happen every administration happens here. there's a reason. it is true that it could be the new normal but until we try a new set of policies the republican policy is not that complicated. allow the energy of the economy to grow. that's what has been carrying us. all kinds of things that you can do by doing less or nothing. stopped aing adding entitlements. >> quickly. >> we are still the number one economy on the globe. china is slowing down. the brit countries are not doing

well. europe is not doing well. we are the ones who stand out because it's still a vibrant private sector that goes on despite all of this. >> all of that means that obama hasn't entirely killed it yet. >> with that cheery news let's head into the candidate at the casino. we head into the candidate casino every friday. this is the republican side. this is where you have $100 in chips. you can place them wherever you'd like. and nina let's start with you. >> i put 40 on marco rubio. this is a change for me because i've been betting more heavily on jeb bush but the poll that came out that showed him 10 10 10 with other candidates he's not pulling ahead and marco rubio is not gaining strength. the other person that i would put 10 on that is on the table now is carly fiorina. i think she's had a really good run. she's somebody that people are taking a look at. they think she's attractive. there's a lot of it -- attention

to her, particularly in iowa. >> amy? >> i'm with nina. i took a little money off jeb bush this time around but i put it on scott walker. and i think scott walker in this case gets the benefit of doubt when he talks to voters. jeb did not have that benefit of doubt. this changes over the course of a campaign. jeb could prove to be a better candidate and walker could prove to not be a very good candidate. at least right now where voters want to be is with somebody like scott walker. >> you know the casino online which we've -- twerter, a facebook on the home page they are heavy, ted cruz ben carson much more chips than this panel ever does. >> well that's because we are all rhinos right? mine remains the same. bush ahead of walker. because they've been doing so dumb and introduced a new factor which is the chances of somebody coming out of the second tier jumping into the first.

three people in that pool i put in the cruz feeling and christie 10 bucks that one of them will emerge and become top tier which means i have to cut back on 5 bucks on wine & song. >> i don't think that gets you a -- >> they are confused about the whole 10 bucks a share but i got your point. >> at the roulette table you can go for three numbers. >> this is more like blackjack. >> i like when you come to the table with your own rules. >> how else can you win? >> i want to play one thing on the democratic side. this little video from someone who is making an announcement tomorrow. ♪ ♪

>> martin o'malley amy, is going to announce that he's running for president. that's kind of a cute video. but what about this? >> you know martin o'malley has a decision to make here. he's obviously going to run as a more progressive. he's talking about being the more clear progressive, a new generation. he's 15 years younger than hillary clinton. he also has to decide how hard he'll run against hillary clinton. hillary clinton, think about her on a football field. she's the strongest player on the field but she has a weakness and we know that iraq is one of those things foreign policy and the clinton foundation and others. i don't think he's going to go for the knee, but we'll see. >> bernie sanders on trade went

towards the knee just recently saying i made a decision i'm against it. she has to make a decision. >> right. the trade thing is a perfect example where she's staying out of the spotlight -- well she's in the spotlight, under her terms but she's not answering questions on trade which is tearing the party apart. have we looked at what happened in baltimore when bernie sanders went on to be governor of this state? he doesn't have a great record to run on. >> or the maryland economy. but he's -- >> or obamacare in maryland. >> he's going to be a factor. he will shake things up a bit. >> he'll be in the debate he'll be on screen the name recognition will go up. he's not running for 2016. he's running for 2020. next up the nsa switching from organized labor and winners and losers. when eating healthy and drinking water just isn't enough to

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the only thing standing in the way is a handful of senators who are resisting these reports. despite law enforcement saying let's get this done. >> they are not too happy with me in washington. i made a mess a little bit of their vacation. . and i'm expecting a very cool reception from the other senators. but the thing is these are important debates. >> well some of the patriot act

provisions are set to end, expire sunday at midnight. senators are coming back on sunday and this is a big issue. . it's interesting for the president who is fighting for this and the pitch, the sales job that they are doing. >> and the great fear of this is we're going to track the terrorist attacks and sunday night suddenly the program, particularly the surveillance program is not in place anymore. . what is messing up is rand paul's presidential ambitions. >> and the fact that the president making the pitch isn't the issue. it's republicans that the fight

is with. this is the first time mitch mcconnell has been working with the white house on a whole lot of issues. john boehner is working with the white house. mitch mcconnell is the odd man out here. it's a bit ideal. >> my problem is how many speeches on obamacare. this sales pitch on friday afternoon seems a little lack luster. >> this is obama on every issue of national security. whether it's on on afghanistan, whether it's been on isis, whether it's been on this. he will say the right words but say them on a friday afternoon. he won't make a speech. he will not invest any of his political capital that's a mistake. right on this compromise and allow the other act the compromise act to go because we cannot go dark on sunday night.

>> and rand paul, we should point, appears to be all in on defining his presidential hopes on this. okay. winners and losers. >> my winner is the rule of law and/or the fifth circuit of appeals which upheld the stay the injunction against obama's illegal and unconstitutional legalization of illegal immigrants. my loser is fifa, the soccer federation it was enjoyable to see a bunch of corrupt officials arrested in their pajamas in a 5 star swiss hotel in the middle of the night if only we could do that to the iranian negotiators in the nuclear talks. >> amy winners and losers? >> get arrested at 5 star hotel in switzerland isn't a bad place to go. so my winner is finally summer so thank you for that the humidity back with a vengeance here in washington, d.c. and that translates directly to my loser. i'm staying within inside the beltedway. there is now talk in

washington about a city that has its own very "newsweek" problems with -- unique problems with mass transit and other forms of transportation about putting a gondola across the river that connects virginia and georgetown. i would really like them to focus first on just fixing my street my house great. if they can do that then we can talk gondola. >> my winner is the new attorney general loretta leverage going known for going after hard to get criminals as prosecutor. she went after this corrupt soccer organization that everybody knew was corrupt for years and it took her to go after and do the indictment. and my loser sadly, denny hastert. what a sad fall from grace. he was a squeaky clean speaker who came in after tee multi-in the house temult. it's a sad day for him.

>> that is it for the panel. stay tuned for lesser known slogan of the obama presidency.

finally tonight president obama and senator obama had many slogans yes we can hope and change. research on all of his speeches and found another signature phrase that he says twice almost every time. >> everybody please have a seat. have a seat. >> everybody have a seat. have a seat. >> everybody have a seat. have a seat. >> everybody have a seat. have a seat. >> everybody have a seat. have a seat. >> everybody have a seat, have a seat. >> everybody have a seat, have a seat. >> have a seat. have a seat. >> have a seat, have a seat. >> have a seat. have a seat. >> have a veto. have a veto. please everybody have a seat, have a seat. >> please everybody have a seat have a seat. please have a seat, have a seat. >> please everybody have a seat have a seat. >> is that tick? >> it can be cured i'm

sure. >> have a seat. that's it for this "special report," fair, balanced and unafraid. make it a greatwwwwwwwwwwwwwwwwwwwwwwwwwww your thoughts about the police in america. thanks for watching. i'm megyn kelly. this is "the kelly file." welcome to this special edition of "hannity tonight." college graduates get ready to enter the real world given advice by their chosen speakers those who deliver commencement speeches. some great, some shocking. for the hour we'll examine both. first to kick things off here are some of the best advice give ton graduates so far this year. ♪ >> those of how are graduating this afternoon with high honors awards and distinctions, i say, well done. and as i like to tell