"President Trump said in his inaugural address that every decision he makes will be to benefit American families. How does arguing about crowd size do that?" Wallace asked.
"It's really not about crowd size," Priebus replied. "What it's about is honesty in the media."
He said that "from day one" the media has been trying to undermine Trump's legitimacy and cited a reporter who tweeted that a bust of Martin Luther King, Jr. had been removed from the Oval Office.
"The point is the attacks, and the attempts to delegitimize this president in one day," he said.
"You talk about honesty, and say that this was about honesty," Wallace said. "Well, there's another issue, though, Reince, and that's the President's honesty, because two things that he said yesterday were just flat wrong."
He showed side-by-side photos from Trump's inauguration and President Barack Obama's inauguration in 2009 to compare crowd sizes.
"Take a look at those pictures," he said. "Which one is bigger?"
"Listen, you're also not saying that that picture was taken before he was even speaking," Priebus interrupted. "I could take a picture of the Mall right now—"
"I was there! I was there on the Mall!" Wallace said, speaking over Priebus. "I mean let me say first of all I think this is a ridiculous conversation, but there were huge areas. He said there were crowds all the way to the Washington Monument."
"There was," Priebus said. "I was sitting there."
"Reince, there weren't," Wallace said.
"Yes there was," Priebus insisted. "I was sitting there looking."
Watch the entire exchange below, starting at 0:54: