direction since then. he's closed if you look at itover all. now, the obama folks can console themselves with the knowledge that if they hadn't opinion pouring all this vitriol onto romney and his character in these personal attacks, romney might be up. this might be a time where you'd see romney up five points, so they can console themselves, but my gosh, for $100 million after all of this attacking, attacking, attacking, they'd like to see mitt romney's favorables with voters lower, and they'd like to see the horse race with the president back to holding a little lead. megyn: and now with unemployment in this country at 8.2% and that's, you know, the best number, that's if you don't count underemployment and the number of people who have left the work force and so on, the message from the white house right now when it comes to president obama's re-election effort seems to be about whether mitt romney was actually in control of bain capital from 1999 to 2002, whether mitt romney needs to release 8-10 years of tax returns or just two

years of tax returns and whether mitt romney outsourced jobs at bain capital versus what the president -- i mean, you tell me as a political observer, chris, is this how campaigns are run? you know, get down to minutiae, get in people's heads about he's a felon, he's this, you know -- [laughter] and don't look at the unemployment rate, don't look at the huge, you know, numbers that identify the state of the economy. >> well, look, if president obama wants to win a second term, he'd better have something else up his sleeve because if it's july and we are already to this tacky what year did the sec filings say what and you're a felon and all of this overheated -- and it's very small, all these things are sort of small gauge. now, they say it illustrates, again, in these character attacks on romney, this is obama saying unfit for the presidency. but as you say, you click back a couple of spaces, and the american people who mostly are doing their best to ignore the process, understandably at this point, when they dial in to the

political process again this fall, they're going to say, okay, what are the big strokes and what's going on here? what the president needs to do is kill mitt romney's reputation right now, and he needs to kill him dead because if romney survives to the fall, exactly what will happen is this: if he gets through this, take a couple dings, but if he makes it postconvention and obama has not ruined him, then people are going to take a look at the situation. as we've talked about, the state of the economy being what it is and worse the trajectory being what it is, the president is not going to get reelected. so he is putting all his chips on ruining mitt romney right now. megyn: let's talk a little bit about the tax returns because yesterday bill kristol went on fox news sunday and said romney should release his tax returns, he should do it immediately, and he should do it from 8-10 years i believe kristol said. the word we've had out of the romney camp is we can expect a couple, and i don't know how many more, if any, we're going to get, chris, but even you point out in your piece today why has he waited so long?

>> well, obviously, looking back now, and you remember we talked about this back in february in the south carolina and florida republican primaries when rick perry and newt gingrich were just hammering tongs after, after, after mitt romney to release his tax returns x they wanted ten years, one wonders why romney if he was going to release stuff, didn't get it out of the way then. you heard governor romney this morning, they're going to do two years which is what john mccain did last time. it's not what obama did, in 2008 he went all the way back to 2000. but romney's going to do two, and he's going to stick. and he's going to bet that in time voters are going to tire of hearing this discussion about this over and over and over again because you can only go back to that well so many times. and then even reporters or news outlets that are sympathetic to the president will get weary of it. megyn: what do you make of the timing? because i know you had questions about why he would have waited until now. could it potentially be something that, you know, reflects some low tax rate,

something that he doesn't really think is going to help him politically such that he may be timing it perhaps to go along with the vice presidential announcement? i mean, what would be the strategy for waiting until, you know, the closer we get to november the worse it is if it's something bad. >> right. now, i doubt that it's much different than the year before, for goodness sakes, he's been running for president since 2007. megyn: right. >> there shouldn't be that many surprises in there, but team obama's going to seize on it and say this money was there and, my gosh, look how doggone rich mitt romney is, and he did it at this low tax rate, shame, shame, shame. so, yes, they have a predictable news event coming up in the release of mitt romney's running mate, and they're going to change the discussion for a period of time at least. if you're going to release -- this is just conjecture on my part -- maybe you shove the release right up against that running mate announcement and hope it gets out there and by the time obama convinces reporters to come back around to that theme, that it looks warmed over.

megyn: chris stirewalt, thank you, sir. >> you bet. megyn: president obama also getting anticipation for some campaign trail remarks about small businesses n. a speech he gave in virginia late on friday, the president took a swipe at entrepreneurs according to his critics telling them that they did not get there, to their successful place, on their own. it is the government in large part that they have to thank for their success. >> somebody helped to create this unbelievable american system that we have that allows you to thrive. somebody invested in roads and bridges. if you've got a business, that -- you didn't build that. somebody else made that happen. the internet didn't get invented on its own. government research created the internet so that all the companies could make money off the internet. megyn: so is that a fair assessment? do these business owners really owe their success to the government? and what does that mean for this campaign debate? lou dobbs has some thoughts. he is here in moments.

we've got some new video coming in on the breaking news we've been following for the last hour. a security team onboard a u.s. navy vessel firing on a boat in the persian gulf off the coast of dubai. reportedly worried that he could be under attack from iran. fox news confirming now that one person has been killed, three more injured near iranian waters. this after the boat sped toward the navy oil tanker ignoring repeated warnings. it is important to note that iran is known to deploy small boats which have a history of harassing u.s. navy ships in the region. all this comes after the navy just days ago sent dozens of special unmanned subs into the persian gulf, a story we told you about last week. a spokesman says the navy is investigating. fox news is following this very closely, we're going to bring you a live report from the pentagon just ahead. fox news alert from florida now where a mountain of new evidence was released a short time ago in the shooting of

trayvon martin. you can decide for yourself whether some of this is evidence or not. more than 140 recorded phone calls were made public that these phone calls made by defendant george zimmerman from the florida jail. he's been accused of second-degree murder. these calls were supposed to be released weeks ago when a similar release revealed that mr. zimmerman may have lied about his finances prior to his first bond hearing, but the latest batch of recordings raises a new set of questions about this case. steve harrigan has been going through the documents as fast as they can, he's live in miami now with more. steve? is ghr megyn, we've had these documents for about two hours, but it looks like the headlines are going to come not from zimmerman's phone calls from jail, but from the text of an interview with witness number nine. in this interview she makes two really damning claims about george zimmerman, claims that we cannot confirm as yet, and we haven't heard zimmerman's side

of the story yet. we expect to hear from his attorney within the hour. but the first claim she makes is that george zimmerman began to sexually molest her when she was 6 years old. zimmerman, she said, was just a couple of years older, and she said it continued until she was age 16. >> i was afraid that -- [inaudible] because the kid was black. screwing up. they've always made, him and his family have always made statements that they don't like black people if they don't act like white people. they like black people if they act white. >> reporter: of course, that is the second sound bite about, from witness number nine that george zimmerman is a racist. so we have really two claims here, unverified, just one side of the story. the first is that george zimmerman sexually abused witness number nine, the second that zimmerman and his family

are racist. again, we expect to hear from zimmerman's attorney within the hour for their side of the story, but certainly a case that's already been inflamed for months now in florida, likely to erupt again over these latest accusations. back to you. megyn: what -- i mean, how are we getting into alleged molestation between a 6 and 578-year-old in the -- and an 8-year-old in the context of this case? why do we even know about this? how is this potential evidence in the zimmerman case? >> reporter: that's exactly the point we expect to hear from zimmerman's attorney in a short time. he's going to say this is completely irrelevant, it has nothing to do with the case. but keep in mind this woman, witness number nine, made the call to the police after the shooting. she claimed that she knew zimmerman was a racist, his family was racist, and the judge said zimmerman's attitude towards race does have a bearing in this case. that's why he made a decision to release these tapes. megyn: uh-huh. and there was evidence on his behalf that supported him on his claim of not being racist in the

first release, and now we have some more to the story that doesn't necessarily reflect as well. steve hair began, thank you, sir. later on the show we're going to take a closer look at these new recordings, and we have will have a fair and balanced debate about whether this actually impacts zimmerman's defense and why do we even know about this allegation? is it relevant, what happened between a 6-year-old and an 8-year-old 20-plus years ago in determining whether this was second-degree murder or not in the zimmerman case? we'll talk about it to today one docket in kelly's court. retail sales numbers out today show a decline in june, that's for the third straight month now. unemployment lines are still a mile long, home values still weak, and the national debt just keeps going up, expected to go over $1 trillion again this year in terms of the deficit for the fourth straight year in a row. with all that you could argue that america is in crisis, but are the campaigns addressing that? or minutiae? we'll debate.

and the president defending his attacks on mitt romney, refusing to apologize even after one top campaign adviser suggested governor romney might be a felon. the former white house chief of staff, john sununu, is just ahead. >> can you imagine how dumb this president is introducing the concept of felony into the -- a party?

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megyn: new questions today about how we define success in this country. the president getting attention for remarks in a speech he gave in virginia on friday where he seems to take a swipe at small business owners, according to his critics, and entrepreneurs. listen here. >> somebody helped to create this unbelievable american system that we had that allowed you to thrive. somebody invested in roads and bridges. if you've got a business, that -- you didn't build that. somebody else made that happen. the internet didn't get invented on its own.

government research created the internet so then all the companies could make money off the internet. megyn: lou dobbs is the host of lou dobbs tonight on the fox business network and syndicated radio host. lou, the president was trying to say that if you're a small business owner and you succeed, good for you, good on you, your creativity, your ingenuity was in part not to blame, but to be credited, but so is government. and that's why the rich need to pay more taxes. he was making the case to raise people's taxes. >> megyn, yours is, i think, a very generous interpretation, and i will endorse it. but nowhere in there did he actually say out loud, good for you, it was your independence, your self-reliance that drove the creation of business -- megyn: well, he said when we succeed, we succeed because of our individual initiative, but also because we do things together. >> uh-huh. megyn: you're not on your own, we're in this together, he kept saying. >> and whereas independence, innovation, inventiveness, where

is the statement that says point-blank that capitalism in this country is flourishing when government is standing aside? he makes it sound like the only way you're going to have a decent life and we can restore prosperity is to spend another $1.5 trillion. i think the man, frankly, first of all, i think he's made firehouse number one in roanoke, virginia, is going to be, it's going to be an important landmark in virginia because that's where the president first went off the rails in this campaign. this statement i truly believe is where he revealed his collectivist preference idealogically, where he revealed his contempt for capitalism, small business and the men and women who create 70% of the jobs, and i think firehouse number one is where it really all begins -- megyn: how? how do you glean that? what insight do you think it provides us into how the president thinks? >> when you say that you didn't

make that happen -- megyn: you didn't build that. >> a small businessman or woman, i mean, you want to say that, i mean, to the people who are creating 70% of the jobs, and the man who has run up over $4 trillion in the national debt in three-and-a-half years as president? the man has lost all perspective and contact with basic understanding of economics and particularly this great capitalist, free enterprise economy of ours. megyn: he would say he's not trying to condemn capitalism. >> i don't care what he says, i've heard what he says. megyn: i can speak to catholic guilt, and i know my friends is jews have in this as well. >> we're going wide. megyn: your mother says i'm very happy, good for you, but now you owe the people who helped you get to where you are. so he's doing a little like, look, you got there, good for you, but you didn't build the roads, you were set up for success, and now you have to, as

the president put it in his speech, pay it forward. >> i think any american thinks of his or her individual responsibilities and obligations to society. but those are not translatable to a government mandate and a fiat from a president who is not enforcing laws and choosing other laws that he wishes to enforce with a particular interpretation. this is a president that's gone far afield from a sense of individual duty and obligation to government mandate, directive and fiat. and i think, again, firehouse number one is the pivotal point in the 2012 campaign where this president reveals himself for precisely what he is idealogically, politically and with his vision for america. and it's not one that conforms to our history and our traditional values. megyn: do you acknowledge, though, that folks that, you know, build small businesses and find success, that they -- he was saying you might have had a teacher who helped you, you had breaks along the way --

>> absolutely. megyn: -- that you should, you know, respect, that you should pay forward, that you should, you know, work harder to help. now, he said the end result of that is you should pay more taxes. >> but that's an asinine conclusion. it is such a leap of illogic that to be breathtaking. i can think of a dozen public education teachers to whom i have a great personal debt, obligation and a enduring sense of gratitude. and dozens of people beyond. but that does not give the federal government the right to decide what my response to that debt and to my gratitude -- megyn: how to say thank you. >> and certainly not in the form of higher taxes. megyn: yeah. lou dobbs, thank you, sir. >> great to be with you. megyn: my mom has her master's in guilty and my nana has her ph.d.. [laughter]

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megyn: fox news alert in the mysterious disappearance of two little girls in america's heartland. police just wrapping up a news conference saying they have no new clues in the now-intensifying search for 8-year-old elizabeth collins and her 10-year-old cousin, lyric cook-morrissey. both went missing on friday. their bicycles turned up just hours later noor a lake in e -- near a lake. hundreds of volunteers have been fanning out across the area

looking for any clue. a life report on the latest details is coming up in our second hour, and the tipline remains open. new fallout, now, in the twisted drama that is the u.s. olympic uniform controversy. chinese state-run media now calling u.s. lawmakers hypocrites for demanding that the uniforms be made in america. fox business network's robert gray live in new york. robert? >> reporter: hey, megyn. yeah, hypocritical and irresponsible, that is what the mouthpiece for the chinese government news agency is saying about this whole flap over the team usa uniforms, designed by ralph lauren, made in china here. now, the news agency says u.s. politicians are violating the spirit of the olympics by all of this complaining, and in fact, they said the the olympic spirit is about separating sports from politics. they say the u.s. politicians are going too far in trying to force a political tag onto the uniforms, they go on to say that

u.s. lawmakers should be banned from wearing anything or using products made abroad, obviously, impossible in today's stage of globalization, nearly anyway. they went on to blame u.s. election year politics. senate majority leader harry reid calling for these uniforms to be piled up and burned. the only thing that should be burn is the rhetoric, that democrats attacking romney's record at bain capital for outsourcing jobs and, of course, governor romney pledging to get tougher to china's currency practices, ralph lauren had a statement out reacting to all of this controversy saying they are committed to producing the opening and closing ceremony team usa uniforms in the u.s. that will be worn for the 2014 games. they're saying they will be made in the usa next time around. they made them in 2008 for beijing and also in 2010 for vancouver and, of course, they're still on tap to do it in 2014. in russia for the winter games. megyn: wow. you've got the americans wearing

the french berets that were made in china who are now heading off to london to compete in the olympic games. i think i got it. >> reporter: no ascots for me, please. megyn: last week somebody said they're quintessentially american. really? i don't think so. all right, thank you. >> reporter: sure. megyn: well, the juke retale -- june retail sales numbers came out today, add to that the millions who are unemployed or underemployed, and we obviously have an economic crisis on our hands. so why are we hearing more and more -- why are we not hearing more about this on the campaign trail? are these two men locked in a battle other minutiae? and why? don't we deserve better? also, new controversy as a mountain of puzzling new information is released in the george zimmerman case. there is a new set of questions about the possibility of hate crime charges in connection with the shooting death of trayvon martin, and now out of left

field apparently the issue of alleged molestation of a 6-year-old by an 8-year-old? in the zimmerman murder case? that's in kelly's court. >> what about george? does he ever, does he ever say anything specific that made you feel he was a racist? >> i can't remember growing up exactly anything, but i know that that's -- this is just a known thing, that that's how their family feels. when you have diabetes...

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prescribed by rheumatologists. megyn: live pictures coming back right now from cincinnati, ohio, where president obama is set to speak within the hour, reportedly set to talk about mitt romney's investments again. but what about the economy? right now more than 23 million americans are unemployed or underemployed. that is one in every six people. our debt, $15.8 trillion. it's larger than the economic output of all of europe. add all of that up and then look at this. the majority of people in this country think things have gone off the rails here. this poll from the washington post. 63% of americans say this country is on the wrong track, just 33% think that we are moving in the right direction. so are we debating the right things right now in this country? brad blakeman is the former

deputy assistant to -- former president george w. bush, and dick harpootlian is chairman of the south carolina democratic party. i mean, the past three days the news headlines are replete with did mitt romney have operational control of bain capital from 1999 to 2002, and does barack obama owe mitt romney an apology for some senior aide saying that he might have committed a felony if -- i mean, both sides, you tell me, brad, i'm -- there's such a turnoff, both sides, the way they, the way they run this race it's -- the american people are disgusted with this kind of politics. am i wrong? >> no, you're absolutely right. i think the american people want to get onto the real issues at hand, and either the president or mitt romney are actually addressing those issues. but let's face it, obama has invoked a 3-d strategy; district away from your own destructive policies, distort romney's

record and divide the american people, rich against poor. this strategy is only useful when an incumbent doesn't have a record to stand on, to be hopeful on and to herald. and romney's letting him keep on the defensive when romney should be on offense. it's like a sporting match. you have to have two teams, you can't rely on one strategy, and they better start talking about the issues, and more importantly, megyn, show us who's behind the curtain. who does romney rely on? who are the experts he will bring to government on the economy, on immigration, on health care? these are the folks who have yet to take the stage. megyn: dick, it is like a sporting match, isn't it? i mean, as chairman of the democratic party in south carolina, you can speak to this. it is like a sporting match now. and are we getting the truth? are we getting to the issues? i mean, mitt romney, you know, he -- brad doesn't like what president obama's arguing about bain capital, but mitt romney comes out, he needs to apologize. really? is this how we're going to spend

our time with those numbers i used in the intro to you guys? >> i think it's important to remember, and brad, i'm sure, wasn't aware of this, it was going on in '04, when john kerry's major issue was his vietnam war record going back 30 years rather than just 10, brad. so, you know, this is not unprecedented. we did it in '04 when george bush did it to distract this country from what he was doing. but without the partisan yin-yang. there's no question that because of independent spending groups, because of the inability of the american people to fight their way through the haze of battle we've resorted to, you know, throwing punches at each other. and let me say this, um, i think at the end of the day mitt romney's got to put out 12 years of income tax returns and show the american people that he hasn't been -- megyn: really? really? i mean, you tell me, brad. maybe he does, maybe he doesn't.

but you tell me whether those unemployed, you know, 26 million or underemployed give two figs about mitt romney's tax returns from ten years ago. >> they don't. and this is only to be used, again, to divide, distract and distort the real issues which the american people care about. the democrats would like the fodder. they already have two years of tax returns. they've combed through those. there's nothing there. so what they want to do is have another few years so again they can create a smoke screen. the american people are sick of it. and, dick, you know better than anybody that you're not going to win an election blaming third parties. that's too easy. we have a president about to go on television and went on television on friday, and the message that he was giving was very destructive. and it was not hopeful about our future or what he's done for the country, and the same thing -- megyn: oh, they both, but they both do it, brad. >> that's what i was going to say. romney's doing it too. megyn: president obama, he wants credit for being positive, for being such a positive messenger, and so does mitt romney.

and when they sit down with an interviewer one-on-one, oh, they're very positive. but when they get off camera, dick, when they go to the ad campaigns, they're completely negative, and they lie! they lie! mitt romney put out an ad about solyndra that "the washington post" said was full of pinocchios and not true, and barack obama did the same thing about mitt romney's time at bain capital. does truth matter anymore at all in the political process, dick? >> i don't think so. i think it's all about perception, and reality as perception. and, you know, i'm here from south carolina, i went to college and hung around with lee atwater, the father or whatever you want to call him of all this, and he understood that it is the battle, it is the, you know, it's not whether your team or their team's better, it's when they get on the field and when they go at each other. and often times you'll see an unsportsman call or you'll see a clip or those sorts of things. and that's what's going on here.

look what happened in, i mean, to take the analogy a little further, look what happened in new orleans. we had people being paid to hurt people. um, i don't see the new orleans saints being any less popular this year than they were last year. this is a cultural issue. it's beyond politics. megyn: yeah. >> truth matters though. truth matters. megyn: does it matter? does it matter, brad? >> you bet. megyn: i talk about both sides with the misleading ads, but just for an example, the bain capital one that the re-election campaign from the white house put out gets all these pinocchios from "the washington post", and then they continue on with the line of attack. >> of course. megyn: and i'm sure mitt romney's going to do the same thing in his solyndra attack. does truth matter? >> truth matters, and you're seeing it reflected in the polls, in the piece that you ran just a few minutes ago. it shows that the american people are seeing through this nonsense and are getting turned off by it. so, yeah, they hear the noise, but they want to hear the facts. truth matters. they can decipher truth from

falsehood, and at the end of the day, they're going to be voting for truth, they're not going to be voted for fictitious facts that they know are false. megyn: dick, you pointed out the swift boating in george w. bush's re-election campaign. take us back further. i don't remember well enough what was happening when reagan was running for re-election, you know, or back even before that. has politics always been this way, or is it just now -- >> oh, absolutely. megyn: -- in the land of 24/7 cable that there's a bigger spotlight on what happens? >> i mean, if you go back to andrew jackson's campaign way back when -- megyn: you remember that? [laughter] >> i don't remember it, i've read, i've read about it, and being since he was a south carolinian, born here, we say here, north carolina says there, those are races run on who's having a mistress, who had an illegitimate child. that's always happened. the problem, and i think, megyn, you've hit the nail on the head, there is 24/7 coverage on this.

you can't escape it. at least back then you had to see a pamphlet or you had to go to a meeting somewhere or attend a stump meeting. this, this 24/7, we're inundated with it. you can't turn on the it's set in a battleground state without both sides bombarding you, and i think at the end of the day -- >> but, dick, you may not be able to escape it, but you can shape it. you don't have to perpetuate these falsehoods. it's up to a candidate to exert some leadership. megyn: i've got to leave it at that, guys. >> i've got two words: karl karl rove, okay? what about him, brad? megyn: all right, we'll leave it at that. [laughter] thank you both so much. >> thank you. megyn: and we're taking your thoughts on it now. follow me on twitter, let me know what you think. we're getting more breaking news on the persian gulf. a u.s. navy oil tanker firing on a small boat that got too close. at least one person is dead, and

we're going to have a live report from the pentagon and exactly what this means ahead. plus, this used to be the image of american leadership in space exploration. today an american astronaut is having to hitch a ride on a russian rocket. thousands of former nasa employees are not only just looking for work, but now are having to volunteer their time giving tours down at the kennedy space center. really? how did the once-grand dream of space exploration become another victim of a country that may have lost its way? former nasa astronaut scott horowitz joins us live next. and president obama refusing to apologize for his campaign's attacks on mitt romney, calling them appropriate. we've talked about this moments ago. john sununu is here just ahead. >> can you imagine how dumb this president is introducing the concept of felony into the discourse when this president comes out of chicago politics where felony and politics are

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>> i believe that this nation should commit itself to achieving the goal before this decade is out of landing a man on the moon and returning him safely to the earth. no single space project in this period will be more impress e to mankind -- impressive to mankind or more important for the long-range exploration of space. megyn: those words by former president kennedy launched one of the most ambitious and successful collective efforts by mankind in our history. it also made nasa the premier space agent i in the world. but -- agency in the world. but that was then, this is now. today a nasa astronaut is forced to piggyback a ride into space, blasting off saturday in a russian-made soy use capsule while thousands of formerly well-trained engineers down at

nasa are still out of work a year after the end of the manned space shuttle program. they are literally walking around the kennedy space center giving tours to dignitaries and providing oral histories to tourists. scott horowitz is a former nasa astronaut. doc, welcome back to the program. it's sad. >> yes, megyn, it's very sad. thanks for having me back. as bad as it is down in florida, it's tens of thousands of aerospace workers across the entire country that this has affected. megyn: and let's not make bones about this, this is not a political matter. president bush was the one who first put into process the end of the shuttle program, and president obama then piled on and curtailed the mission even further. so we've got bipartisan blame to go around. you can blame whatever you want to blame, budget constraints and so on and so forth, but what does it mean to you, what should it mean to americans sitting at home to see now an american astronaut having to piggyback a

ride to space with the russians? >> well, megyn, um, i mean, i would be pretty upset if i was an american taxpayer knowing that our country went from the premier space, you know, country in the world to, basically, number three behind the russians and the chinese. i mean, we started on a path to replace the shuttle back in 2004, and then it was underfunded, as you said, in the bush administration, and then the current administration just completely canceled it, and now we don't have a replacement for the space shuttle. megyn: i mean, you think about when we were little kids, and you saw images like this. even, you know, back when i was young there was the disaster of the challenger that happened, you know, when we were -- i was in middle school, i think, at the time. the craft blew up, and we had columbia not so long ago, so there have been disasters. but still it was a point of pride, this program, for all americans. and now it's gone. >> right. i mean, megyn, i grew up,

actually, i lived for a short time in indian harbor beach, florida, just about a dozen miles south of the cape. i watched the first saturn 5 take off. my biggest fear was by the time i was old enough to apply we would have already been to mars and beyond, and all the good stuff would have been over by now. so this is really frustrating to see us just, you know, plod along and slowly dismantle our manned space flight program and lose a huge source of national pride and a big motivation for students all over not just the united states, but the world to succeed in math and science and do great things. megyn: and now you've got more than 7400 people who were once, i mean, these are some top engineers and so on who worked at gnat saw, i mean -- massa, i mean, walking around the kennedy space center offering oral histories. god bless them. i mean, i represent them for offering their expertise, but we could use them for so much more. they're capable of so much more,

doc. >> oh, megyn, i was fortunate to have flown on four shuttle missions, and the thing that was so amazing was i got to go around and meet all the people and work with all the people that made that possible. and you're right, these are some of the most dedicated, talented individuals you could ever meet, and to waste that human capital resource is just a crime. be. megyn: well, that was your bummer segment for the day, but we thought it was worth taking a moment and just sort of marking a point, very unlike that point we saw in 1961. mr. horowitz, thank you, sir. >> oh, thank you, megyn. always a pleasure. megyn: likewise. well, up next, breaking news on the search for two young cousins who mysteriously vanished near their homes in iowa. we're going to have a live report on the very latest. stay with us. and i've been on a bayer aspirin regimen ever since. [ male announcer ] be sure to talk to your doctor before you begin an aspirin regimen. i know if i take my bayer aspirin

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megyn: fox news alert now on the desperate search for two missing young cousins in iowa. police who just wrapped up a news conference saying they have not been able to turn up any new evidence since their disappearance on friday. steve brown has the very latest live from chicago. steve? >> reporter: hey, megyn. yes. when authorities say that they are grasping for straws, it does give an indication that they've reached something of a dead end in regards to these two missing girls. now, these two cousins were last seen on friday near an area called meyers lake near evansdale. and we're talking about 10-year-old lyric cook-morrissey and 8-year-old elizabeth collins. that was the last time they were seen. near this lake is where the girls' bicycles were found, and they were thought to be out on a bike ride. even though the lake is fairly shallow and 80% has been searched, nothing turned up in terms of a clue or indication of what happened with the girls. the road is -- the lake is also

very close to an interstate, u.s. 380. no amber alert has been issued essentially because there is so little information on where the girls have been, no suspicious vehicle could be pinpointed in order to issue an amber alert. certainly, conversations with the family -- which are still talking to the media -- point towards a possible abduction. have a listen. >> i, myself, have taught her, um, if a stranger approaches you, you know, number one you just don't even talk to them, walk the other direction. um, and then i taught her myself if they've got ahold of your arm, drop to the ground, kick, fight, scream, do everything you can. >> whoever has them just turn them in, let them loose anywhere so they can call me. lyric knows my cell phone, she knows my house phone. >> reporter: now, it does appear that according to authorities that this is not a custody situation which is sometimes at the root of disappearances involving children. not a custody battle, apparently. police today reported that they

were back recanvassing areas that they hadn't looked at before or canvassing areas they had looked at before and reinterviewing witnesses. some family members are trying to get a sense of where these girls have gone, but so far police have no clues, no indication, and usually in these kinds of cases police are very forthcoming about details in hopes of getting a good outcome. megyn? megyn: steve brown, thank you. well, a top member of the president's campaign staff suggesting governor romney is a possible felon, but no apologies from the president. he stands by the attacks. john sununu, an ardent supporter of governor romney, joins us live with reaction right after the break. and breaking new developments on the strait -- the situation near the strait of hormuz in the persian gulf. a navy ship firing at a motor boat that came too close. a live report from the pentagon, plus ambassador john bolton with what he says you need to know about this. three minutes away. okay, team! after age 40, we can start losing muscle --

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and protein to help protect, preserve, and promote muscle health. keeps you from getting soft. [ major nutrition ] ensure. nutrition in charge! megyn: fox news alert on a u.s. naval vessel firing on a boat in one of the world's flash points, the persian gulf, killing at least one person. welcome to a brand-new hour of "america live," everyone, i'm megyn kelly. two senior officials confirming now to fox news the ship that fired the shots, the usn, rapahonic, a civilian oil tanker. today shots fired off the coast of the united arab emirates not far from the strait of hormuz after a boat are rapidly approached our ship and ignored warnings to move away. today's events in very close proximity of iran. they are known to send ships out

into that area. they crashed into the u.s.s. cole killing sailors. >> reporter: they say the ship did all measures it could before using lethal force against the small dinky-sized vessel as it approached the boat for a second time. they fired after the small vessel ignored the audible and visible signals to move away according to u.s. navy official. one official said the small boat turned away and crossed back towards the ship. the navy's fifth fleet put out this statement. quote, the u.s. crew repeatedly attempted to warn the vessel's operators to turn away from their deliberate approach. when those efforts failed to deter the approach vessel they fired rounds from a 50-caliber

machine gun. it's 20 miles off the coast of the arab emirates, 20 miles from the strait of hormuz. the pentagon announced this morning it would be sending the u.s. aircraft carrier group the john c. stenis four months ahead of schedule, to arrive late this summer. navy officials have said they have not been able to locate the craft, the small phrets yo pleasure craft that was fired upon. they are looking for that as part of their investigation. they have not identified that country which approached our vessel was from. megyn: the fifth fleet is based in bahrain and is responsible for america's naval forces in the persian gulf and the surrounding region. it deploys the aircraft carrier

the u.s.s. enterprise and the u.s.s.ee ow u.s.s. io skwraoepl ma. in ten minutes former ambassador john bolton and what you need to know about today's events. he contacted us and said, this is what we need to talk about. we will hear from limb in momentshim in moments. fox news alert the president has begun speaking at a campaign event in cincinnati, ohio. we are told that he is planning to renew his attacks on governor romney's business records. the remarks are streaming live if you care to watch them on foxnews.com. there is new fallout on some increasingly personal attacks made by a member of the president's re-election team against governor romney. the president refusing, personally refusing on camera this weekend to apologize for those attacks, and repeated

attacks on governor romney's tenure at bain capital and insisting that remarks suggesting that the former governor, mitt romney may have committed a felony, are quote, entirely appropriate. a claim backed up by one of the president's campaign managers and a senior adviser. take a listen. >> he's not going to get an apology. >> it's interesting just a few months ago in the republican primary mitt romney said to his opponents who he was crushing at the time, stop whining. i think that is a good message for the romney campaign. instead of whining about what the obama campaign is saying, why don't you just put the facts out there and let people decide rather than trying to hide them. megyn: john senunu is a top romney surrogate and he served as chief of staff under president george h.w. bush. john, welcome back it's good to see you. >> it's good to be here, thank you very much. >> you hear stephanie cutter who is the one who threw out the term felon, that he may have committed a felony, governor

romney depend on whether he was actually in control of bain capital for the extra three years or he wasn't. and the scc filing said one thing, ba, ba, ba, governor romney demanded an a mol gee and she said, quit your whining, what what say you. >> governor romney would rather be talking about his plans, how to deal with the medicare, with the package he put out, similar to paul ryan's or perhaps even talk a little bit about the need to cut the top corporate tax rate in america, it's now the the highest in the world. that should be cut to attract investment and create jobs. that's what the governor would rather be talking about. folks keep bringing up distractions like this. so i will address it. as i've said before, it's amazing to me that this president would introduce the word felon into the discourse. this is a president who wallowd

in chicago in the murky soups of pol politics/felons, where the politicians quite often end up as felons in jail. they have two governors in jail right now. this is the president that cut a very snarky real estate deal with tony resco who is now in prison who tried to extort money on a political basis. why would the president want to give people an opportunity to raise his wallowing with felons in the past by raising that question? i have no idea. i think it's a silly move on this part and i think it's going to come back and bite him. megyn: governor romney has come out this weekend more on the offense to president obama trying to get the message focused on his opponent. we had a segment half an hour ago talking about how turned off the american people are by this. >> the governor would rather

talk about the other. megyn: what position are they? governor romney, it's not like he's ward cleaver with completely clean hands, they both do it. they both do it. i get the emails from my viewers, they are sick of it, they are sick of this kind of back and forth. >> with all due respect and i appreciate you trying to be fair & balanced, but it has been done by governor romney in response to the attacks that have been made by the obama administration. we could be talking today about the 24 million unemployed and under employed, they are the ones that have problems. when i go to the supermarket and talk to folks and they want to talk to me about governor romney, what they talk to me about the most is the fact that this is a guy that can solve the problem that their son or their daughter, who just graduated from college can't find a job on. they want to talk about the fact that they need a president that can solve problems. i'm very happy to talk and discuss the details of either the budget package that governor romney has put forward, and by

the way, and by the way, president obama in almost four years now has failed to present a single budget that could be passed. he presented bulge thaets wer that were such jokes it got a 414 to vote in the house. he has absolutely made no effort to meet his legal responsibility to get a budget forth. when you don't have a budget you can't have an economy that functions well. megyn: how should governor romney have responded? even some rerps coming out an republicans are coming out and saying, to demand an apology, over he may have committed a felony, that was not way too do it. if president obama is guilty of chicago politics, should romney take a lesson. >> he does haven't to britt up, it's guys like me who bring it up, and i have. if president obama thinks he's going to escape the reality from

giving contracts to bund hers, to cronies, who are represented by former white house staffers. the money he gave to solyndra, you didn't like to talk about solyndra, it's a fact. the money was given because there were b u.n. dlers in the investments. to the car companies, these are all realities. megyn: let's say all of that is true and you've got these economic figures that are so bad, ba, ba, ba, why is this race so close? >> it's so close because president obama is an incumbent and should be way ahead at this point. it's close now, the amazing thing is it's still close with president obama having spent $50 million in the battleground states trying to smear governor romney over the last few weeks, and the governor's campaign has held fire. they frankly have shown, in my opinion, great discipline, and they are preparing themselves for the time period from just

before the republican convention to election day. and i think that's when you're going to see real engagement. the governor has been out there constantly talking about issues, but unfortunately with the strategy of distractions which the president likes to employ, there will be not opportunities, responsibilities for having to respond to them or else the press will say we're ignoring them. megyn: john senunu we did invite stephanie cutter on to the program. she didn't want to come on with you. no, she just declined. >> it's okay. maybe the president would like to come on and i'll really go into some details on his wallowing with felons in illinois. megyn: i'm sure he'd love to have a debate with you on that. thank you for that generous offer. >> thank you. megyn: thank you, governor. see you. we brought you the breaking news about a u.s. oil tanker firing

on a ship that thought it might be a threat from iran. ambassador john bolton is next on why this is suddenly a more dangerous persian gulf. tomatoes and shoes were thrown at our secretary of state hillary clinton, it actually got uglier from there. and who says working for the government can be dull? move over, secret service, the sex and prostitution scandal rock the treasury department, the treasury! just ahead. ok! who gets occasional constipation,

diarrhea, gas or bloating? get ahead of it! one phillips' colon health probiotic cap a day helps defend against digestive issues with three strains of good bacteria. hit me! [ female announcer ] live the regular life. phillips'. megyn: back now to our fox news alert, today's big development in the persian gulf. a oil tanker from the navy firing on a small boat. the boat came too close to the american vessel at rapid speeds despite warnings not to get any

closer. ambassador john bolton is the former u.n. ambassador to the united nations and a fox news contributor. he is here to tell us what this mean. usns rappahannock is operated by civilians but u.s. military on board. we take a shot at this vessel. why is it anything more than there was fear, a mistake and that's the end of it. >> it shows how red tkaoet navy is to prevent actions by iran that could be designed to carry out the iranian threat to close the strait of hormuz. you know, this kind of small vessel rapidly approaching, ignoring warnings had all the earmarks of the attack on the u.s.s. coal over a decade ago which almost sank that ship. so the very quick reaction by the navy, whether it was a civilian ship or iranian boat, whatever it was demonstrates they are not going to fool around, they are going to protect american lives and be very, very alert to any iranian effort to cause any trouble in

the persian gulf. megyn: you think iran is watching this? >> i think it's every possibilities this was a little test of the united states navy, and the iranians flunked the test because that boat is presumably on the bottom now. megyn: but this was apparently not an iranian boat after all. who was testing us? >> let me tell you if the iranians come at us with a lot of speed boats intended to be suicide bombers in effect they are not going to be flying the iranian flag, they will be dressed like fisherman, look liken sent civilians, and the navy gave them warning in this case, which is more than they deserve, frankly. i think it's a clear signal, maybe not intended by our navy, but a very clear signal to everybody that they simply will not tolerate questionable behavior in the gulf. megyn: does this then decrease the likelihood in your view of any sort of armed conflict in the gulf, or in the strait of hormuz? >> if i thought rational people were in control in iran i would say yes, but i think what it demonstrates is that the iranians are pushing the outer edge of the envelope, they feel

confident, they see a weak white house, and i think they are going to test the limits. i think that is a mistake, because even this white house cannot tolerate any interference with navigation for the vital oil traffic in the persian gulf. even though today or this past couple of days the united arab emirates has opened a big new pipeline that avoid the strait of hormuz, nonetheless too much of the world's oil goes through that strait to allow iran to threaten anything. megyn: i always use the word choke hold when they talk about that and the expoertd of oil. our secretary of state goes to egypt, this is the greeting she gets. i want to talk to you about who did this. check it out as they throw shoes at her, they throw tomatoes as the caravan -- listen to what they are chanting [monica, monica ] >> this is not exactly a show of respect for the united states.

obviously monica. shoes in the middle east are considered nasty, dirty sorts of things. tomatoes speak for themselves. we are not sure. i've see seen reports that these were the muslim brother haorbgsd the islamists, demonstrating what they think of hillary clinton. actions are spinning out of control, this is small but symbolic. megyn: she played out, i want to play the sound byte saying look, we are not taking sides in this arab spring. listen to what she said back then. >> these revolutions are not ours, they are not by us, for us, or against us, but we do have a role. we have the resources, capabilities and expertise to support those who seek peaceful, meaningful democratic reform. and with so much that can go wrong, and so much that can go right support for emerging arab

democracies is an investment we cannot afford not to make. megyn: are those the same people who were throwing tomatoes at her, the people she was supporting there? >> this is a very good demonstration of the misreading of the arab spring. you can be opposed to an a authoritarian government. we completely misunderstood where the bulk of egyptian opinion was. it wasn't with google using english-speaking westerners, it was with the brotherhood and we are now suffering the consequences for our misperception as demonstrated by the secretary's remarks. megyn: why are they so upset? we already approved our $0 billion in aid package for them. why are they throwing tomatoes at her. >> it's intended to demonstrate exactly what they think not just of her but of the united states generally. megyn: not just her it's us. >> and that is the attitude

demonstrated by the president of egypt, mohammed morsi. megyn: a scandal at the treasury department. reports of workers soliciting prostitutes. a live report from washington on what happened, how high up this might go and whose dollars they used to pay. brand-new controversy in the george zimmerman case today. they come in disturbing allegations against zimmerman made by someone who knew him in his childhood b wha about what allegedly happened between them when she was six and he was eight. is this really evidence in the murder case? "kelly's court" has a fair & balanced debate. >> they like black people if they act white, and other than that they talk a lot of -- a lot of bad things about -- about black people. the medicare debate continues in washington... ...more talk on social security... ...but washington isn't talking to the american people. [ female announcer ] when it comes to the future of medicare and social security,

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megyn: there is a growing controversy and a gruesome search underway in australia after a surfer was fatally mauled by a killer shark. horrified witnesses saw the 24-year-old surfer attacked by a great white. one of them says he nearly became a victim himself. >> i was on the back of a jet ski, and in front of us saw a guy get attacked by a shark, and took him out of the shore and went straight out, and there was blood everywhere. and a massive, massive shark surbg eld the body eastbound circled the body, and i tried to

rescue the half of the torso left. and the shark came at me and almost knocked me off. megyn: that has sparked a heated debate and those in the government over whether great white sharks should be continued to be considered a protected see she's. government officials forced to come out and say they would not put shark safety ahead of human safety. a new allegation today of ethical misconduct rocking a government agency, this time within the halls of the treasury department where several employees have been cited for among other things soliciting prostitutes. steve centanni live in washington with more. >> reporter: one employee made dates with prostitutes on a treasury department computer. another accepted tpweufts from bankers he was supposedly regular hraeugt. these are th regulating. these were documents released by government addict.org.

11 allegations were uncovered in recent years, six of them substantiated, including the 36-year-old government veteran who admitted that he used it resources, that is computers, to view web sites offering erotic services on a weekly basis as well as communicating with and arranging meetings with woman offering erotic services. the unnamed employee acknowledged he was aware he was soliciting for prostitution and met with prostitutes on three occasions. they point out this is a handful of the 107,000 employees and they tell fox news treasury has a strong ethics policy that we expect all our employees to follow and the overwhelming majority of them do. as with any large organization issues of conduct occasionally arise, when that happens at treasury we act promptly and decisively to take care of them. they say it's more embarrassment

in the wake of the secret service and csa scandals. >> it's going to put the obama administration on the defensive because, you know, the government and the size of government and what the government is doing is such a central part of this presidential election race. >> reporter: criminal charges were brought in only one of those cases of wrongdoing at treasury, megyn. megyn: steve centanni, thank you. >> reporter: you bet. megyn: just wondering if that's the right defense when your employees get caught soliciting prostitutes to say it was just a handful. new questions today about the investigation into the trayvon martin shooting after a new release of information that includes accusations against george zimmerman by a childhood friend. "kelly's court" takes a look. plus president obama says small businesses, the backbone of the economy says you didn't do it by yourself. the president telling business own thaers they got help from the government along the way, all this as a justification for raising taxes.

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megyn: egyptian security forces

now say that two americans and a tour guide held hostage in north sinai have been released. reverend michael lewis, a 39-year-old woman and own egyptian translator taken off a bus friday while on a church trip through the holy land traveling on a road between cairo and mt. sinai, a route targeted by kidnappers. they were finally released after they gave way to the kidnaper's demand to release his uncle from prison. the condition of the hostages is unknown. >> somebody helped to create this unbelievable american system that we have that allowed you to drive. somebody invested in roads and bridges. if you got a business you didn't build that. somebody else made that happen. the internet didn't get invented on its own, government research created the internet so that all the companies could make money

off the internet. megyn: that was president obama telling america's small businesses an entrepreneurs, you didn't get here on your own, but rather the helping hand of government made your path to success possible. this is all in an effort to justify his call for increasing taxes on the so-called rich in this country. that came from a speech in virginia last friday and it's generated a growing debate in the days since. joining me now nor a fair & balanced today beat. melissa frances host of money on the fox news network. charles payne who is a business owner himself and a contribute r-r. and frank sheincoff with the clinton gore campaign. megyn: it think it can now be said without equivocation that this man hates this country. he is trying to miss mantle

brick by brick the american dream. rush is going to say what rush is going to say. in is where the right is going to go with this comment. and you hollywood lou dobbs on earlier saying this is going to be assem tphal moment in this campaign where barack obama its looking at small business owners the backbone of the economy and saying, you didn't do it by yourself, and there you owe, there is some sort of obligation to pay more taxes because your employees road o rode on bridges and roads. >> i don't think anybody who has any success in life says i did this all by myself. i think the government has to take credit for revenue that comes from businesses. the government doesn't generate any revenue. all it does is take tax money from me, that's how they generate revenue. this is a big moment and easy lean eighted a lot of people. megyn: there is a big question

about how business owners feel when they hear that. there is a presumption built in saying you are not paying your fair share and not giving back to the american public that helped you get where you are. >> one of the ironies of course is when the president talks about someone building the roads and bridges, it's the businesses. megyn: who built them. >> that's where the tax money came from. the people who worked and are successful, that's how they got built in the first place, it's not the people that are not working. it's really offensive. i mean despicable, offensive, ignorant. the statement -- i heard elizabeth warren say it. megyn: you're rile upset. >> i am upset. i know how hard i've been working, ten years without a vacation around-the-clock. i've sacrificed relationships with spouses, kids, everything, i speak for all small business people, it's crap, it's the ultimate insult that the president has to dig this low, and it's ridiculous. it's so infuriating because it also gives credence to people who don't work hard.

in other words, see, here is the thing, if you can't take credit for your success because of society then you can't be credited for your failure because of so saoeufplt not only is he hurting people that are trying hard but he's giving a free pass to people who aren't. megyn: you're a democrat, why are you shaking your head yes. >> this is the defining moment. what is being told to people particularly in the midsection of this country is that their efforts aren't significant enough, and the problem here is that the democrats in the house and senate ought to be telling the president of the united states to stop saying these things, because he's cutting them out of the possibility of picking up seats every time he attacks localized small businesses. megyn: do you think this is a big moment in his campaign? >> i think it's an extraordinary moment and he's moved himself further to the left than is necessary. the winning is down the center, it's the map that richard nixon put together in 1968, it's the map that bill clinton has used,

everybody else has used. he's putting another rift in that map, not so good and he's pitting poor against rich in way that is not usable or helpful. megyn: he came out last week calling for a raise if taxes for those making over 250,000 thrarz an$250,000. and he talked about it was nothing against small businesses, he lowered taxes on small businesses 18 times. that was to justify that call for increased taxes. i mean does he convince any small business owners, maybe, maybe left-wing, we know the left-leaning small business owners that they need to pay more. >> i don't think you convince anyone with anything like this. you don't convince anyone who owns a business. maybe you fire up your base, maybe you fire up people in the extreme left. if you break down what he said it has a very socialist theme to it and that's what i think anyone who knows anything about economics and listens to that. megyn: you have to pay it forward. >> i mean, small business owners do. they hire people, every dollar that you send to washington in tax is a dollar that you're not

spending giving somebody in your business an hour of over time, buying another computer, buying more software. it's not like that money would have gone nowhere it would just be sitting on the sidelines, it would be deployed somewhere else in the economy. every small business owner knows that that's a choice that they are not spending it somewhere else. megyn: he's talked about this repeatedly charles, how he talks about you do need to be your brother's keeper and you're not on your own and that's sort of the america that he sees. and then you hear a response by folks saying, that is fine, but i will choose the ones that i look after. america is the most generous country on earth. >> the president says there are a lot of rich people that agree with him and that they want to give back. listen, no rich person, even warren buffet is not talking about giving his fortune to the u.s. government. he's going to give all his money to bill gates. no rich person is saying i want to give the government more. they do a lot. this is to dismiss -- megyn: president obama spoke and actually suggests that there are some, he said, he talked about how there are a lot of wealthy, successful americans who agree

with me because they want to give something back. >> right but they don't want to give it to the government. they do want to give something back. i give something back. i'm sure everybody in this room gives things back but we don't want to give the money to the government to spend on things that are ridiculous. we know there are better ways to create opportunity. i'm telling you who the real victims here are. those small kids out there, young adults that might have a bug that says, i want to be extraordinary. if they are going to snatch it from you and brow beat you, why do that. >> mom and pop stores will be put out of business because they can't pay the taxes, and the health insurance and the benefits required and that is a very, very serious thing. these a different issue, and that is not a republican nor a democratic issue but an issue for the country. if we're going to see malls and the chain stores that are going to be in business we'll see people earning minimum wage, with lower benefits because that's how that system works. megyn: you helped get president

clinton -- >> i've worked on 600, 700 campaigns all over the world. megyn: but this president has continuously said, all i want to do with these tax hikes that i'm proposing is bring us back to the clinton era and business was booming and the economy was booming, so don't act like this is some huge -- the messaging on the small business is a different thing. >> the clinton tax increase was required to insure that -- if you look at the outcome of the clinton years this was a creditor nation. the economy had not been better. we avoided extraordinary military adventure. he has a problem we have a deficit that is outrageous and we have a debt problem that is not insignificant. >> and the economy is not growing. megyn: is there anything to this notion by some on the right that, you know, president obama just sees the economy in a different way. >> he does, absolutely. i mean it's the difference between believing in a free market economy and believing the

cain's model. they would say you can only grow the economy when you're not deeply in debt. the revenue comes from somewhere, from taxpayers. if you levee higher taxes it detracts from the economy. this is the on going debate to show it doesn't work, the other side would argue the opposite. it shows the fundamental difference between someone who wants enterprise to prosper, business to grow, the economy to grow, more jobs versus somebody who thinks that the government does the best for the economy as a whole, the government controlling it is the best way to go. they are just totally different philosophies. >> it's a way to punish people who put their lives on hold to put the 16, 17, 18, 20 hours in a day, seven days a week that is required to build something, that's what is startling. megyn: you talk about your own personal history and sacrifice. >> i agree a hundred percent with that. the president is saying i have no faith in the american people, only the government can do it. >> my grandfather came here on a

boat and he built something, 18 hours a day, seven days a week. you know, people ought to have that opportunity. megyn: has you, it's not often we get that agreement along the ideological lines. thank you very much. get out of free cards for inmates accused of violent crimes in oregon. we are live with the story. shocking recordings just released in the trayvon martin case, when a woman known as witness number nine has to say about george zimmerman, why are we hearing about allegations about what happened between her and george zimmerman when they were six and eight respectively? and can her broad-base statements about the alleged racism of his family actually come into evidence against him? that is next. >> he would reach under the blankets and try to do things, and i would try to push him off but he was bigger and stronger and older. [ female announcer ] the power to become a better investor has gone mobile.

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megyn: "kelly's court" is back in session. new evidence in the trayvon martin murder case, or is it. prosecutors release 150 phone calls made by george zimmerman in jail. he's the neighborhood watch volunteer who said that he shot the 17-year-old martin in self-defense. new record insurance from a woman known as witness nine could spell potentially more trouble for mr. zimmerman. she tells investigators, in addition to the jailhouse phone calls, that her family has known the zimmermans for years and now she claims they were all a bunch of racists. >> just that i was afraid that he wasn't going to do the thing because the kid was black. growing up him and his family have always made statements that they don't like black people if they don't act like white people. they like black people if they act white.

and other than that, they talk a lot of bad things about black people. megyn: joining me now, lis wiehl a legal analyst and mike eiglarsh, a former prosecutor and now a defense attorney. can we all agree this would never be allowed into evidence at trial, lis. >> the first part of this evidence, this quote unquote evidence, the part where she is saying there was sexual molestation when they were six and eight that is never coming in. it's not relevant, it's overly prejudicial. it's not coming in. the jury is not going to hear that. megyn: his family always made statements that they don't like black people. >> the other part could come in, here is why. there are good character witnesses to prop up somebody and say this defendant is wonderful and here is all the wonderful thins he's done in his

life and there are bad character witnesses that the prosecution can bring in. if the prosecution can show it's relevant it goes to zimmerman's mindset that that fateful night and may come in, megyn. megyn: mark, she does seem some say on the tape, he and his family. if she has proof that he has made racist statements in the past about not liking black people, then maybe they've got him, but the family? >> yeah, yeah, right. let me just say this. anything is possible, but when she specifically is asked on that tape, what did he specifically say, he meaning george zimmerman, what has he said in the past that caused you to conclude that he was a racist, she said, i can't remember anything. okay. what about him acting out on it? what did you observe? i can't say anything about that. so they, we're now judged by what our parents think? that would mean i don't like dogs, and i love dogs. megyn: and then they get specific with her saying, well then what specifically do you

remember? what are you referring to, witness number nine, when you say the whole family is a bunch of racists, and shear is what shhere is what she said. >> and just be a little clearer on why you're saying that the family is racial. >> his mother protested it very loud when i was working on her. somebody was talking about ow obama and i said, oh, yeah, did you hear about that? and she asked what? and i said, something to do with obama and we were talking about it. and she said, i don't like obama. >> i said why not? just thinking she was joking. she said because he's black. i am a racist. >> objection, irrelevant. megyn: that happens a lot, lis. >> it's a real stretch for the prosecution. let me make the prosecution's argument. the prosecution could say, he grew up with this.

this is the mentality. he didn't say anything, he didn't counter his mother or father. megyn: he wasn't there. >> megyn this is -- megyn: this is a smoking gun, they've got some witness number nine saying the mother of george zimmerman was said to some woman i don't like obama because -- because he is black, i am a racist? >> right. here is the problem, megyn even if the prosecution gets this in, even if the judge says okay it's got relevancy that he was there, wasn't there whatever, the problem is as a prosecutor i wouldn't really want it in because if i'm stretching that hard if i have to look that hard for motivation that is not a good thing for the prosecution. >> that's the point megyn. let me tell you the problem here. they have charged this as a second-degree murder. they skipped over manslaughter. this is a life felony. that means they have to prove, ill will hatred or spite. what next? they're going to show some witness that saw him eating a black and white cookie and he only eight the white part?

megyn: that could be helpful. >> if another witness came forward and said, i heard him saying these things. megyn: if you get specific agree now you're closer to it. after the break we're going to talk about this alleged molestation. now why are we hearing about this? that's next. [ male announcer ] don't miss red lobster's four course seafood feast, st $14.99. start with soup, salad ancheddar bay biscuits then choose one of 7 entrees plus dessert! four perfect courses, just $14.99. come into red lobster and sea food differently. 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: lis wiehl and mark eiglarsh are back with us. now there is the statement about alleged molestation when she was six and he was eight. >> he would reach under the blankets and try to do things and i would try to push him off, but he was bigger and stronger and older. it was in front of everybody, and i don't know how i didn't

say anything, but i just didn't know any better. megyn: lis dash ash. >> it's not going to come in megyn. the most the prosecution can say is look it's a prior bad act, it should come under the prior bad act -- megyn: is it? >> it's a six and eight-year-old. there is no proof, never any charges. there is nothing that really can can you be stan kwraeut it. megyn: we are not talking about sex or -- i don't want to get too graphic. it seems to be the extent of what we just heard is the alleged molestation. >> right. the prosecution to make its case would say, look, this gives us one more example he was a bad guy when he was ate and a wors eight -- i'm not saying it would work, the prosecution will want to get it in to say he's a bad guy then he's a bad guy now. >> lis wiehl you impress the hell out of me when you can let that argument flow from your lips i know this is so u

unbelievably legally irrelevant. in the court of public opinion one more reason to hate zimmerman. the jury pool is further poisoned when it comes time for game day. megyn: when you find out she was eight and she was six. >> they are not going to hear that, they are going to hear he's a molester that's what they'll hear. megyn: he was trying to kiss her and -- >> right, megyn it's the same thing we talked about in the earlier segment. i worry for the prosecution to over reach. megyn: to even put this woman on the stand, lis, to even put her on the stand. >> exactly, exactly. megyn: it sounds like this woman has an axe to grind against the zimmerman. >> if it's true that it happened when she was six and he was eight -- >> i don't think the prosecution will call her. it has to come out because the

law allows it here in florida, but i understand why you won't want it in. it's very prejudicial. megyn: thank you both so much. we'll be right back. : a party?

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>>megyn: what do you think of the zimmermann scalded "evidence," and what do you think of the president and his attacks on bain? let me know on twitter. >>shepard: thank you, the news begins anew. and sailors on a u.s. navy ship fire on a boat in the persian killing one. and injured three others. the navy reports the boat ignored the warnings. details are coming up. and officials in florida release 140 recordings of george zimmerman's phone call and what the man who killed the central central seen age said just ahead. >> and shopping on the internet may be about to get more expensive. online sales tax reportedly coming to everyone. that's all ahead. unless breaking news changes everything. this is "studio b."

but first from fox at 3:00 in new york city, the republican presidential candidate, mitt romney accuseing president obama of favoring his big political donors while ignoring the struggling middle class. >> this is a tough time for the people of america but if you are a campaign contributor to president obama your business could stand to make, or get billions or hundreds of millions from cash from the government. it is wrong. >>shepard: romney campaign has been on the defensive after obama campaign claimed the governor was not being honest about his time as head of the investment banking firm bain capital. they charge that governor romney may have commit add felony by running bain capital for longer than he claims and romney camp is triage new strategy planning to get tougher on president obama, by scrutinizing his record in the white house. and now james is on it live in washington, dc. james?