Return to Transcripts main page
CNN's The Arena with Kasie Hunt
Just In: Death Toll In Texas Flooding Rises To 95; Now: New Tariffs From Trump Send Stocks Tumbling; DOJ: Jeffrey Epstein Died By Suicide, Had No "Client List". Aired 4-5p ET
Aired July 07, 2025 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BORIS SANCHEZ, CNN HOST: We know that the White House is planning for President Trump to visit later this week, perhaps by Friday, though, it seems like a tentative plan right now.
[16:00:02]
We're going to keep chasing to confirm that news. We do want to continue to bring you the heartbreaking stories of family and friends, lost and missing here in Texas.
Among the victims of this tragedy, Anna Margaret Bellows from Houston. You can see this young girl smiling with her Camp Mystic sweatshirt on, holding on to a stuffed animal. Anna Margaret Bellows was just eight years old. She is now part of this group of girls that were lost at this camp. Our hearts, of course, go out to their families.
Our breaking news coverage continues.
"THE ARENA WITH KASIE HUNT" starts right now.
PHIL MATTINGLY, CNN HOST: A race against time to find survivors as authorities warn more floods could be on the way.
Let's head into THE ARENA.
In Texas, at least 95 people are dead after catastrophic flooding and rescuers are still looking for dozens who remain missing. I'll speak with retired General Russel Honore about this disaster, and whether more could have been done to prepare.
Plus, as the markets close, stocks had their worst day in nearly a month, because President Trump -- well, he restarted his trade war. South Korea, Japan and other countries all threatened with tariffs of 25 percent or higher. That is, of course, if they don't reach a deal with him by Wednesday or August 1st.
Hey, everyone. Kasie Hunt is off. I'm Phil Mattingly, welcome to THE ARENA.
Right now in Texas, a desperate search for survivors is growing more urgent as every second passes. Authorities today confirmed that at least 95 people have been killed since Friday, making this one of the deadliest floods in the U.S. in a century. And the danger is far from over. Nearly 5 million people in central
Texas are again under an elevated threat of new rainfall and flooding. Now, at the center of this tragedy, Camp Mystic, an all-girls Christian summer camp where at least 27 children and adults are dead.
At this hour, ten campers and one counselor are still missing as survivors. They're holding out hope for a miracle.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I've lost many friends, best friends, my boss, my godchildren, my house, my car. You know, all those materialistic things, but it's those people that still haven't been found. Some of them just praying for their recovery and everyone else affected as well.
(END VIDEO CLIP)
MATTINGLY: Camp Mystic is located on the banks of the Guadalupe River, which you see right here, on Friday, after it rose more than 20 feet in less than two hours. The rising death toll and the scale of the destruction, it all leads to a painful question. Could more have been done to give the people of central Texas an earlier or better warning that disaster was on its way?
Here's the mayor of Kerrville, Texas, one of the cities most devastated by the floods.
(BEGIN VIDEO CLIP)
MAYOR JOE HERRING JR., KERRVILLE, TEXAS: I think everyone in Kerrville, everyone in Kerr County, wishes to God we had some way to warn -- to warn those people. I've lost two friends. We love them, and they're gone. They're gone.
Everyone here, if we could have warned them, we would have done so. And we didn't even have a warning. We did not know.
(END VIDEO CLIP)
MATTINGLY: My panel is here, along with CNN correspondent Isabel Rosales in Center Point, Texas, and CNN's Kristen Holmes standing by outside the White House.
Isabel, I want to start with you. What have you been seeing on the ground today?
ISABEL ROSALES, CNN CORRESPONDENT: Phil, so I am in Center Point, just southeast of Hunt in Kerr County, where Camp Mystic is located. And the sentiment that I've gotten here from first responders that have spoken with off camera and the hundreds of volunteers who are scouring along the Guadalupe River and the tributaries here, is they're very clear eyed that enough time has passed by where they're holding on to hope, to find survivors, to find these missing people.
But they're very realistic that likely this is a recovery process that they're doing now, is there sentiment that is not officially what has happened with first responders? What they have announced?
Let me show you kind of the lay of the land here. We are seeing in this area by the tributary of the Guadalupe River, volunteers coming out with heavy machinery. And what they're doing here is just removing all of these heavy limbs of the cypress trees, moving it to the side and clearing the way to make sure that they have not missed any spot any single hole, any portion of this mud where somebody's missing might have been dragged here from the powerful flood waters.
It is a meticulous process. It is laborious. I want you to listen now to a marine who came out and volunteered what he saw.
[16:05:05]
(BEGIN VIDEO CLIP)
MICHAEL GUYER, VOLUNTEER: What inspired me is the fact that I figured I could be prioritizing myself in an important way, even though I'm not actively involved as a first responder and everything, I figured I can at least come and help relieve them of some stress and exhaustion. It's really just the effort to try to just find closure for the families and the victims, even if it means like just finding the remains.
That's more than enough for me to kind of just give satisfaction that I did a job well done. It's very humbling, just because all we're right now is just belongings and just debris after debris. It's just exhausting.
(END VIDEO CLIP)
ROSALES: And we also have video showing the Texas A&M task force with a cadaver dog named Finn searching underneath of a bridge with all of this heavy tree debris. I told you, it's a slow process. They actually have to go in there and clear it to make sure that there's no victim there before they can give a thumbs up to crews for them to start the removal process of these trees and move on to the next section of the Guadalupe River -- Phil.
MATTINGLY: And, Kristen, over to you at the White House. You were at the White House briefing earlier. You asked, I think a really critical longer term question to Karoline Leavitt.
Explain what that was.
KRISTEN HOLMES, CNN SENIOR WHITE HOUSE CORRESPONDENT: Yeah, Phil, this is all about FEMA. So just remember, last month, President Trump essentially announced that he was going to be phasing out FEMA after hurricane season. Now, he was asked to follow up on that yesterday, given the fact that FEMA is on the ground in Texas, he was noncommittal.
But we heard the state and local officials praising the federal response and the federal aid, including FEMA. So, I followed back up with Karoline Leavitt about this. Here's the exchange.
(BEGIN VIDEO CLIP)
HOLMES: Is President Trump reconsidering his plan to phase out FEMA, given what officials have said is their critical role on the ground now in Texas?
KAROLINE LEAVITT, WHITE HOUSE PRESS SECRETARY: Look, the president wants to ensure American citizens always have what they need during times of need. Whether that assistance comes from states or the federal government. Thats a policy discussion that will continue. And the president has always said he wants states to do as much as they can, if not more. And in the state, in the case of Texas, the state and local officials are doing a tremendous job.
(END VIDEO CLIP)
HOLMES: So not really answering the question there.
In fact, another reporter tried to follow up on my question later, and she said she'd already answered it. But as you can hear, she does not actually answer the question of whether or not they're going to phase out FEMA. The other part of this is that Karoline Leavitt came in saying that anyone who was questioning the cuts and whether or not these government cuts played a role in what happened in Texas, anyone who said that this wasn't just a once in a lifetime natural disaster was playing political politics. She said that people were pointing fingers in a partisan way.
And I will say, you know, Phil, one other thing that I asked is that we saw President Trump over the weekend calling Elon Musk a train wreck, essentially saying that he was erratic. He was all over the place.
So, I did ask if there was any concern over some of the decisions that DOGE made while Musk was advising them on cuts, which would include the National Weather Service, she said no, and she pushed back that those cuts could have done anything. But it is interesting to look at that moving forward in terms of cuts that were made under Musk. If we continue to hear President Trump saying that effectively, Musk is unhinged.
MATTINGLY: Yeah, that's a very good point. Kristen Holmes from the north lawn of the White House, thanks so much.
My panel joins me now in THE ARENA. White House correspondent for Bloomberg News, Catherine Lucey, CNN chief national affairs correspondent Jeff Zeleny, CNN political commentator Ashley Allison, and former chief of staff to Vice President Mike Pence, Marc Short.
I want to start with something we heard earlier from Senator Ted Cruz this morning who was making a point, kind of about the moment that we're in right now. Take a listen.
(BEGIN VIDEO CLIP)
SEN. TED CRUZ (R-TX): I think this is not a time for partisan finger pointing and attacks. Now, after we come through search and rescue, after we come through the process of rebuilding, there will naturally be a period of retrospection where you look back and say, okay, what exactly transpired? What was the timeline and what could have been done differently to prevent this loss of life?
And that's a natural process. I think it should not happen in a bitter and partisan sense, but it should happen in a reasonable sense of saying what lessons can we learn?
(END VIDEO CLIP)
MATTINGLY: Jeff, I think it's an important point, a valid point, one I wish everyone would always follow in these moments. And oftentimes, depending on which party is in which place, they don't necessarily do so.
But how's the White House preparing for what the senator is talking about? The next steps here, there are going to be questions asked. There are going to be tough questions.
JEFF ZELENY, CNN CHIEF NATIONAL AFFAIRS CORRESPONDENT: There are tough questions. And this is an example of what every White House goes through. As Marc well knows. I mean, it's the things that are not expected that are sort of outside your immediate control, that really test and administration. And I think what the press secretary there -- I mean, in a sort of half answer to a Kristen Holmes question, was, she said, whether it's states or federal government, that's a policy discussion to have.
[16:10:02]
And that is probably true. But if you talk to Republican governors and you talk to sort of Republicans out in the country, they are beginning to get sort of worried about all of the things that are being handed off onto the states. If it's food assistance or Medicaid spending. And now the potential of store management.
States are not equipped, by and large, to handle something like this. So I think from a political matter, it will be fascinating to see what Republicans in Texas sort of say about this FEMA matter.
But in a more urgent concern, I think the question of readiness is a very good one across the government to writ large. I've talked to Republican officials from the Bush administration, Democratic ones from the Obama administration, the Biden administration, the first Trump administration. There is a concern really, throughout the ranks of officials. Is there a readiness issue because of doge?
And I don't think we know the answer to that yet. But that is a question this administration should be asking.
MATTINGLY: Mark, what is the balance for Republicans on this? I often find myself on Capitol Hill. There are a lot of Republicans who really hated government assistance or disliked or disagreed with it ideologically until their state got hit by a natural disaster where the government has a very clear, I think, an understood role. And then all of a sudden, they're lobbying as hard as they possibly can for the money, understandably so.
What's the balance there?
MARC SHORT, FORMER CHIEF OF STAFF TO VICE PRESIDENT MIKE PENCE: Well, I think that typically, the state and local response is what is driving the response in the first 48 to 72 hours. Then FEMA comes in and supports that.
And so, typically, where you see. Members of Congress, potentially Republicans, who normally would be supportive of cuts, wanting to get additional funding, is in the aftermath to get funding that provides support for the victims.
But the immediate what happens in the immediate aftermath of a tragedy like this really is state and local response. And even FEMA will tell you that before they come in 72 hours later.
MATTINGLY: Both to that point, Ashley. But also, I think the question about DOGE cuts, there aren't really solid answers yet. There's a lot of I think, a lot of curiosity, a lot of concern, but nothing that's explicitly saying national weather service should have had X, Y, or Z that they did not have.
People are investigating. Theres no question about it. How do Democrats manage this? Because there have been some very explicit this is why this happened.
ASHLEY ALLISON, CNN POLITICAL COMMENTATOR: Well, I mean, first, this is a tragedy, regardless. The people who are victims of this flood, we don't know their political identification. And guess what? The water did not care. So tragedy strikes.
I think the thing about a couple pieces. One, DOGE did make cuts to FEMA. They did make cuts to the Weather Service, and so that might have -- the people who have victims of this, their families might have questions. And other people across the country that are live on flood lines, they too may have questions for future.
The thing about FEMA is there was a bill that just passed that had $646 million in cuts to FEMA for the future. We're talking about things that have already been cut. Ted Cruz voted for that bill. So, $640 million are no longer going to be allocated to citizens in this country when natural disasters happen. What do you do about that?
The reality is when the cameras leave this area in Texas, there will be years of rebuilding. I was talking to people who are still struggling in Altadena last week, we stopped covering that. But the tragedies don't end.
And so, that is why Democrats have often said we need these funds. I agree, I don't think we should make this political, but when the review happens, it needs to be honest. It needs to be thorough, and people need to be held accountable if DOGE did play a role in it.
MATTINGLY: Altadena, western North Carolina, certainly --
ALLISON: Everywhere, yeah.
MATTINGLY: -- after Hurricane Helene.
Catherine, building off Jeff's point in terms of readiness for government, readiness in the federal government at this point in time, what are you hearing? Because there's been a lot without any question over the course of the last seven months.
CATHERINE LUCEY, WHITE HOUSE CORRESPONDENT, BLOOMBERG NEWS: No, it's -- we've seen a huge amount of change since President Trump came into office. And I think on some of the specific pieces around readiness, you have heard questions from lawmakers in both parties, right? So, the commerce secretary, when he was on the Hill recently doing hearings about their budget, which includes the weather service, members from both parties were asking what was happening. Would there be staffing in certain locations?
So, I think people are watching. There are -- there are aspects of this that are not partisan. When you're in a small location in a rural area, you're wondering what kinds of resources you're going to have. And so, I think those questions are going to keep coming up.
And I agree, there have not been full reviews yet. We are still in the middle of this. We have to see how this all sort of is assessed and unfolds.
But I think there are people who are watching this.
MATTINGLY: Go ahead. Yeah, please?
SHORT: Well, I think that there will be legitimate questions, but even National Weather Service is not to be fans of the cuts the administration proposed. But even the National Weather Service said that the new Braunfels office that normally staffed by two people, they had five people and that every alert was provided.
I think that when you have a flood of rising 26 feet in less than two hours in the middle of the night, I mean, this is -- this is one of those tragedies I think is really -- is really going to be hard.
[16:15:00]
And, you know, Psalms remind us that God is close to the brokenhearted and, we should be praying for mercy and comfort for those families in ways that only he can give.
But I -- it's true that there will be a time for this, but I also don't think this is a good example for Democrats to use. I think the reality is that even the National Weather Service said that they were fully staffed in this case.
ZELENY: But the question, I guess, in future storms is the hurricane season just begins. I mean, is this a -- you know, if you were sitting in the White House right now, would this be a moment to go? You know, we better check to make sure that you know, that there aren't some readiness issues there. They don't know necessarily what DOGE did. It's a little bit of a
mystery there. So that's my question.
SHORT: Yeah, Jeff, I think that's a great question. My question there really were cuts that impacted this. But you're right. There's going to be extra scrutiny for as we enter the hurricane season, the administration will want to be prepared for.
ALLISON: Hurricanes are going to be stronger. The floods rise that fast because our climate is changing. And this is also the party that wants to roll back all the clean energy cuts. We have to we -- right. The Weather Service might not have changed the outcome of this, but things don't happen in isolation and there's compounding effects.
So, will the hurricanes be stronger this season? Have we ever seen a flood like this? I don't know, we need to ask why. And maybe it's climate change and maybe we should address that. And it doesn't seem like currently this administration really wants to do that.
MATTINGLY: Well, certainly. Second to what Marc was saying, I think there's a lot of questions that everybody's going to be walking through in the weeks and months ahead, but about the prayers and thoughts and significant concern with the families and the people on the ground in central Texas, in the Hill Country.
Now, one note here, officials in Kendall County were at least six people have died, have just said they will be giving an update at the top of the hour. We, of course, will be monitoring that.
Well, coming up here inside the recovery effort with someone who has led these type of operations following major natural disasters.
But first, the breaking news on Wall Street stocks taking a big hit after some major announcements today by President Trump. We'll explain.
(COMMERCIAL BREAK)
[16:21:15]
MATTINGLY: Markets closing in the red after their worst day in almost a month. Why? Well, that came after President Trump sent a number of trading partners letters this afternoon detailing new tariff rates they will face starting August 1st if they do not reach a trade agreement with the U.S. by Wednesday or by August 1st, or who knows? That could be extended as well. We'll wait and see.
Trump threatening a 25 percent tariff on South Korea, Japan, Malaysia, 30 percent on South Africa, 40 percent on Laos and Myanmar. These letters are just the first of 14 that the president is expected to send today to trading partners.
My panel is back with me.
Catherine, I want to start with you as our resident Bloomberg here. So, you must know all the things about all the things. LUCEY: Some of the things.
MATTINGLY: What's fascinating about this is if you look at the rates that are in the letters, there may be like a percentage point to three at most away from the original April 2nd tariffs. So, I read the letters and I thought, this is essentially just an official delay of the deadline. Am I not seeing something?
LUCEY: They are not that different. I mean, this whole process has been deadlines and delays and a lot of confusion. And I think that's been very hard for countries that have been trying to negotiate these deals, because they don't really know what is the real deadline, what isn't.
It's interesting, I think, because the president pretty effectively weaponized using a deadline with Congress to get his legislation passed. But it has turned out that deadlines with foreign leaders who have a lot of other concerns about trade and the world economy have not been quite as moved by these deadlines.
So, now, it looks like it's being pushed. This was after weeks of them saying they were about to announce deals with major, you both the president and top officials are saying deals are coming with major trading partners. We are going to see up to a dozen deals. We haven't seen those yet.
There's been a couple of deals, some of which we still haven't seen. Sort of full details on, and we certainly haven't gotten 90 deals in 90 days.
MATTINGLY: I mean, that was an attack on Peter Navarro. And I will -- that will not stop.
And -- I'm kidding. But that was what he said initially. The administration has not said that since. But what they have said, to your point is, every single week to an advisor, multiple deals are coming, two deals are coming by Friday, three deals are coming by Saturday.
Explain to me why this is working out in the president's favor.
ZELENY: I mean, look, one thing I guess it's working out in the president's favor is the sky has not fallen in terms of higher prices, and that may be the bottom line of this.
I'm thinking back to when Walmart said it was going to have to raise prices because of tariffs. The White House and the president in particular pushed back very hard on that. Obviously, sending a message to other business leaders and business owners.
Not that it hasn't caused great consternation and pain, particularly from -- for some small businesses, there's no doubt about that.
But there has not been this broad, sweeping price hike and the market is only negatively reacting right now, today. But for the last several weeks, it's been gangbusters. So I guess in that respect, it's been in the president's favor. But in terms of this being some grand strategy, even though we haven't heard the 90 days, 90 days since then, that has been kind of the anthem and the theme, and it's sort of unclear what has been happening these last 90 days, because at the end of the day here, the president is effectively, you know, flipping the script a little bit.
MATTINGLY: Yeah. An implicit point to wall street traders, guys, nothing has changed. I don't know why you're reacting now. This has been the kind of the state of play.
Marc, you've often been very helpful to me and kind of being clear- eyed about where things are versus where people are acting like they may be. What is the end game here?
Is it -- because -- and I ask this seriously, because if you're President Trump, you're saying we just brought in $80 billion in tariff revenue over the course of the last several months.
[16:25:04]
All these countries are coming to me and saying, market access and non-tariff barriers.
And what do they want?
SHORT: Well, keep in mind $80 billion is paid by Americans. It's not paid by foreign governments. They're the ones that pay the tariff. The reality is that the July 19th was not accidental. They wanted to get past the tax bill. The trade agenda was interfering with what they wanted to do domestically.
And the administration is riding high. They've had a couple of really great weeks between attack on Iran, between a great jobs report. And as Jeff said, there has been no inflation. But they also haven't been talking about tariffs for the last couple of months. And now, they're basically reigniting that conversation.
So, it's no surprise that markets are down. And the reality is that many of the tariffs he announced previously were delayed, you know? So, we haven't seen the full impact. And many of our greatest and biggest retailers pre-purchased inventory with anticipation. The tariffs that's going to run out in the second half of this year.
So, you're going to see price increases. You're going to continue to see a chaotic trade agenda, and, you know, where is Peter Navarro has been locked in a cage somewhere not allowed to speak to the media. He will be resurfacing. And so, you're going to see more confusion and more chaos in the -- in the coverage of what they're doing with tariffs. And you're going to see, I think, more chaos in the markets.
MATTINGLY: Putting Peter Navarro aside for a second for Democrats right now who've struggled with the broader issue of tariffs, President Biden kept a lot of the first term tariffs on. Marc's point about the chaos, kind of when you start talking about this again, they have an issue again. Is that fair?
ALLISON: Yeah, exactly what he said for the first time on national television. I agree with Marc Short. I think --
MATTINGLY: Not the first time.
ALLISON: Second.
MATTINGLY: He's not Scott Jennings.
ALLISON: Right, right, right. I think to your -- I agree with your point though. So, the numbers are down because he -- the arrow -- for people who don't follow the stock market, who are just like what is happening, when the arrows are red, it's when Trump talks about tariffs, when the arrows are green, it's when Trump does a delay. And that has been the theme over and over.
And this administration rides high. A couple weeks ago the market was up. But there were other issues that brought it up. I think we have always projected that prices will start to really increase after Labor Day, and we never expected there to be 90 days.
And you asked, what are they doing? Probably nothing. The deals were smoke and mirrors. Hocus pocus.
We've yet to see the deals. The impact has not really taken effect. And but Americans will feel this. This is just basic economics. Prices are going to go up if these tariffs stay in place.
MATTINGLY: I will note treasury secretary said 48 hours. Any deals?
Catherine Lucey has never heard that before in this administration.
Well, up next, back to our coverage, of course, of the deadly flooding in Texas. The latest on the forecast with more rain on the way and how that will affect rescue efforts.
(COMMERCIAL BREAK)
[16:32:07]
MATTINGLY: There is no reprieve for Texas as another flood threat looms over the state. A level 3 or 4 risk of flooding rainfall is in effect for parts of central Texas, including Kerr County and portions of the Guadalupe and llano river basins.
CNN meteorologist Chris Warren is tracking it all.
Chris, what are we expecting from this system?
CHRIS WARREN, CNN METEOROLOGIST: Well, right now, Phil, what we are looking at is still the threat for more flash flooding. Seeing a level three out of four here and some of the areas that have been so hard hit by the catastrophe, the unimaginable flooding that we saw.
And these right here are the flash flood warnings in red and green. This is all flood watches.
And so, watches, you can think of it as were watching for warnings. Watches are conditions are favorable for the development of some flash flooding. Warnings mean you need to take action that that flooding is either happening or it is just about to happen.
Here's the rain right now in some of those areas, not as intense as it was earlier, and moving out of some of the warned areas. So, the hope is that we'll see the water levels come back down. A bit of a rise today. Come back down.
You notice showers still in the forecast. They are going to be somewhat transient, not going to linger as long, but still not completely out of the woods just yet. But a break is on the way.
Here's what happened -- way too much rain to see what we saw. A lot of things have to come together. First off, way too much rain. Getting about a summer's worth of rain in hours is one thing. How does it come down? Intense, and it doesn't move very much.
The storms that caused this don't move very much. Like right here. You get that heavy rain over hours and we see the flooding that happened.
Now, how do you get that much rain? Well, Texas is hot and humid anyways. Add in a couple of former tropical systems. Thats that much more juice that gets rained out.
And we see how this played out. Here it is over several hours just after midnight on Friday through 6:00 in the morning. Oftentimes when we deal with thunderstorm, they can last 30 minutes. So, you know, you get into hours of heavy, intense thunderstorm kind of rain. And the unimaginable happens.
And that's what happened here is all week long, the water levels in the Guadalupe River at Kerrville were running below one foot in a matter of hours. You go from something you could walk across. If you have rain boots on and not get your feet wet to water two stories high, Phil. And there's really not much hope at all if that's coming at you and you're not aware of it.
MATTINGLY: Chris, we know the recovery ahead is going to take a very long time and be very intensive in terms of effort, but in terms of the next few days, what does it look like for first responders who are on the ground?
WARREN: Well, what we're expecting is that for the most part, it's going to stay hot and humid tomorrow. There's going to be some scattered showers. But overall, most of the week is going to be dry, could see a few pop-up showers midweek.
[16:35:01]
But still, I feel that does remain to be seen.
MATTINGLY: All right, Chris Warren, for us in the CNN weather center, thanks so much.
Well, for more information about how you can help Texas flood victims, go to CNN.com or text "Flood" to 707070. Well, up next, the friendship fallout, it continues. A new plan from
Elon Musk has President Trump saying the billionaire has gone off the rails. We'll talk about that plan and whether it's something that might actually benefit Democrats.
Congressman Ro Khanna is up next.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
LEAVITT: Look at the extensive work this president has put in to cutting these good deals and doing what's right for the American worker.
[16:40:02]
He is literally looking at the map and looking at every country on the planet and seeing where they are ripping off the American people.
(END VIDEO CLIP)
MATTINGLY: Joining me now to discuss the latest on President Trump's tariffs, economic agenda and much more is Democratic Congressman Ro Khanna of California, who represents Silicon Valley and is the vice chair of the Congressional Progressive Caucus.
Congressman, thanks so much for your time.
I think what's interesting in this moment, as we've seen, I think in the last five minutes, another half dozen letters have come out to various countries around the world, all of which the president is looking at on a map, according to the press secretary. What's interesting to me, what you just heard from the press secretary is an effective political message.
When you're out on the campaign trail in 2024 or in past iterations, you heard that message resonate with voters. What do you say to combat that?
REP. RO KHANNA (D-CA): Well, you heard it as people wanted tariffs on China. They didn't want our steel going there. They felt China had taken a lot of our jobs. When China became part of the world trade organization.
But what makes little sense to many folks is why he's going after our allies, Japan and South Korea, and then cutting a deal with China. I mean, the reality is it's a lot of the jobs went to China. The reality is that China is threatening Taiwan and that we should be allied with Europe, Japan, South Korea and really being tough on China.
MATTINGLY: Do you -- I'm always intrigued when we've talked about on the panel. I'm always intrigued by traders who have very clearly convinced themselves on Wall Street that he's not -- he doesn't mean any of this, right? The 25 percent or the 40 percent or anything like that, whether July or August 1st, it ain't happening. You agree with that?
KHANNA: Who knows? I mean, I think anyone who can tell you they can predict Donald Trump is probably naive. I certainly haven't been able to predict a lot of things over the last ten years. And the reality is, I would have never predicted that he's going to single out Japan and South Korea.
Look, from George Bush on, there was a consensus in this country that we want to build an alliance with India, with Japan, with South Korea, to contain China. And by the way, the bipartisan China Committee in the House is -- has been doing that work under Mike Gallaghers leadership and now under John Molinari's leadership.
And so, I just -- from a strategic perspective, I don't see how this serves American interests to flip it, where you're basically saying, okay, I'm going to go talk to Xi Jinping and cut a deal there, but be tough on our allies.
MATTINGLY: I want to ask you, you've weighed in before, in the past on Elon Musk. I think pre whatever the current iteration of the divorce is, I think you told him before last month, quote, "Having Elon Musk speak out against the irrational tariff policy against the deficit exploding Trump bill and the anti-science and anti-immigrant agenda can help check Trump's unconstitutional administration. I look forward to Elon turning his fire against MAGA Republicans instead of Democrats in 2026."
That was before Musk announced he was starting a new party right now.
What's your sense of what that party may be, and whether or not you want to reach out to him and try and bring him into your fold?
KHANNA: Well, I think that it's going to be one that disagrees with a lot of what Trump's doing. As I pointed out in that quote, I mean, Elon does not support some of the draconian tariffs. He does not support the repeal of the energy renewable energy tax credits. He does not support the ban on international students. He was one of them.
Now, Elon and I have very profound differences. So I don't think he's going to fit into the Democratic Party. But it's much better that were now going to see his tweets with two 200 million users pointing out the flaws with Donald Trump than what he did during the 2024 election, when he used his entire platform to hit Vice President Harris and Democratic candidates.
MATTINGLY: Congressman, stay with me.
I want to bring in the panel on this, and can all kind of go back and forth on this, because I think -- Jeff Zeleny, the congressman, makes a really interesting point of the wallet, obviously, being something we had never seen before at that scale from a single individual.
How is the White House thinking about what that may mean going forward?
ZELENY: Look, I think the White House is wondering if Musk is if Elon Musk is going to keep this up or sort of move on to other things.
I mean, the idea of forming a third party is annoying to the president. We saw that -- he talked about that yesterday. It's not necessarily a political threat to him. Perhaps its better for him to start a third party than to become engaged with the opponents to Republicans like Democrats or finding people who are actually concerned about the debt and deficit.
But I think it makes them wonder, if the separation actually between the president and Elon Musk continues, sort of what could come next. But I don't know that they give him that much thought anymore. I mean, the reality here is that Elon Musk was very helpful of getting the president elected.
[16:45:05]
Would the president got elected without him? Probably. Would it have been more difficult in Pennsylvania? Probably so.
But I think going forward here, it's just the open wild card. Is Musk really going to be serious about this?
Politics hasn't been good for his business. So, there's a lot of skepticism, I think, about what the level of seriousness he actually is, if he's going to put his money where his mouth is and what's the market for this third party.?
MATTINGLY: Congressman, Jeff makes a really good point. This has been really bad for Tesla. And not just in the stock sense. I think when you talk to investors, when you talk to street participants, they're looking at the company and looking at the potential threats that the presidents levying right now and saying this, this might not end anytime soon.
Do you think that this has turned people from your district off about engaging at a high level in politics?
KHANNA: I think it's been sobering. Look, I said to Elon, you didn't take my advice. Stick to cars and Mars. Politics is tough. And you're going to see your popularity decline very fast.
But I think that we underestimate the role he played in Trump's election. Could Trump have won anyway? Possibly. But he used his entire platform and he had all of these folks in the tech world who have a lot of sway with particularly young men, go all in for Donald Trump.
He gave a permission structure to a lot of business leaders, technology leaders, and he was really dedicated to Pennsylvania in particular. So, I think the biggest loss here for Trump and the Republicans is just his no longer being on the bandwagon. They're not going to have his support, his platform, his money, his cultural influence in '26 or '28. And that is good news for the Democrats.
MATTINGLY: Congressman, I want to ask you about the -- really the cornerstone of the president's economic agenda that he signed into law. There are when you talk to Democrats, they say, you can -- I can write you a 200 bullet point list of all the things we can attack on within this legislation. That also makes it difficult for Democrats to coalesce around a single message that would be effective when it comes to going at the bill.
How are you thinking about it going forward? He's betraying the working class and the heartland of this country to give tax breaks to the billionaires in California.
KHANNA: For all the rhetoric of the Republicans disliking California, California billionaires and the billionaires in Silicon Valley are going to do really well based on this bill. They're getting tax breaks. They're getting accelerated depreciation.
You know who's getting hurt? A lot of Trump voters in rural America, with hospitals closing with Medicaid being cut. And I think, as a lot of conservatives have pointed out, that this is actually a betrayal of his base. He hasn't -- the Republicans haven't figured out that they actually did win a lot of working class voters. And my view is that's what's going to ultimately hurt them.
MATTINGLY: So you're not going with FMAP. That's good. It's good to identify.
Ashley, I ask -- I ask the same question for you. I know it can be frustrating sometimes in the Democratic kind of sphere of how lawmakers decide how to message and what to message on these issues. Were there a lot of targets?
ALLISON: Cost, cost, cost. Cost are not going to go down. Costs are going to go up for your groceries, for your health care. And it's -- I would make it all about affordability. The cost of living. That is -- the Democrats tried to do that in 2024. They didn't do it successfully.
There's an opportunity in '26 to make that be the narrative. That would get some of those working class voters back, would re-solidify our base, that we kind of hemorrhage some folks or they just didn't show up. It's all about the economy and costs.
MATTINGLY: Congressman, I know you agree on that. I really appreciate your time. Congressman. Khanna, thanks so much.
KHANNA: Thank you. Appreciate it.
MATTINGLY: Well, coming up, why the Justice Department is now saying there's nothing to see here.
(COMMERCIAL BREAK)
[16:53:35]
MATTINGLY: Well, after months of teasing the release of new information about the accused sex trafficker Jeffrey Epstein and his alleged client list, the Justice Department, well, they're now saying that no evidence or such a list actually existed, or that Epstein was murdered.
The DOJ saying it does not plan to release any new documents on the matter. And writing today in a memo, quote, there was also no credible evidence found that Epstein blackmailed prominent individuals as part of his actions. We did not uncover evidence that could predicate an investigation against uncharged third parties.
Joining me now is CNN senior justice correspondent Evan Perez and CNN legal analyst Elliot Williams.
Evan, you've reported on this for, I think, years on some level now. Tell us how this memo kind of came to be, how this case became such a fixation.
EVAN PEREZ, CNN SENIOR JUSTICE CORRESPONDENT: Well, the case became a fixation, in part because the attorney general and other people around President Trump have fanned the flames of this conspiracy that there was some, some bombshell hidden in these Epstein documents. And everyone has known, certainly a lot of the documents that the Justice Department has been looking at, they've been out in public already for years, because you remember some of his co-defendants went on trial after his after his 2019 suicide.
So, this is no surprise to anyone who's been paying attention. But for people inside the Justice Department who certainly encouraged this, this kind of belief out there, they're now having to admit that there's really no "there" there.
[16:55:06]
And you see in the memo, it says the systematic review revealed no incriminating client list. There was also no credible evidence show -- found that Epstein blackmailed prominent individuals as part of his actions, or that he was murdered. Again, all of these things were known. It's just that there was a certain part of the Internet, and certainly on Twitter, a lot of MAGA believers who believed that there was something here that was being hidden.
MATTINGLY: Yeah. And look, the White House, I think, on some level was active participants at some elements of those corners of the Internet. What did the White House say about this case earlier today?
PEREZ: Well, today, they had to react to the fact that just a couple of months ago, the attorney general on Fox News seemed to indicate that there was a client list sitting on her desk. And now what they're saying, she's -- what she's referring to is just that she was looking at the larger number of documents that were out there.
And again, they held an event at the White House where they brought in all the MAGA influencers to look at these binders, which ended up being documents that had been on the Internet and had been available publicly for years.
MATTINGLY: Elliot, before I ask you a question, I want to play that sound that that Evan was just talking about. Take a listen.
(BEGIN VIDEO CLIP)
JOHN ROBERTS, FOX NEWS HOST: The DOJ may be releasing the list of Jeffrey Epstein's clients. Will that really happen?
PAM BONDI, U.S. ATTORNEY GENERAL: It's sitting on my desk right now to review. That's been a directive by President Trump. I'm reviewing that. I'm reviewing JFK files, MLK files. That's all in the process of being reviewed, because that was done at the directive of the president from all of these agencies.
ROBERTS: So, so have you seen anything that you said, oh my gosh?
BONDI: Not yet.
(END VIDEO CLIP)
MATTINGLY: Elliot, you used to work for the Justice Department and attorney general saying that. And then a memo like this coming into the public sphere. What does it tell you about what happened here?
ELLIOT WILLIAMS, CNN LEGAL ANALYST: It's embarrassing what happened here, Phil?
Look, the attorney general, this is to Evan's point a moment ago sort of fanned the flames of these truly bonkers bat -- I won't say the word -- conspiracy theories that have been allowed to infiltrate, not just American life, but also the government at the highest levels. There are basic facts here that we ought to accept.
Number one, Jeffrey Epstein did really bad things to many people. And number two, Jeffrey Epstein killed himself in prison before he could face trial. Those are facts. That is truth.
Any suggestion to the contrary is simply not held by serious people. And the attorney general herself, quite frankly, is responsible for allowing some of this nonsense to get out there. Now, thankfully, the Justice Department has put this memorandum out there. But this is -- this is just a bad look for the Justice Department. It's actually quite shameful.
MATTINGLY: Elliot, is it normal for DOJ to release a memo like this?
WILLIAMS: It really isn't, Phil. Only because you know, the memo -- the memorandum is really pushing back against conspiracy theories. It's not, you know, explaining why someone wasn't charged with a crime or explaining why someone was charged with a crime, or explaining the facts of the case. It is merely put out there to debunk some of this nonsense that the attorney general actually helped fan the flames of by handing these memos out. You know, these binders out at the White House and so on.
So, no, it is not common at all. Certainly, the Justice Department makes public statements all the time. They make public statements to our reporters like Evan Perez, and that's fine. But pushing back on conspiracy theories is not a core competency of any member of the Justice Department. And quite frankly, it should not be. MATTINGLY: Evan, real quick, before I let you go, any repercussions
for the attorney general on this?
PEREZ: Well, yeah, I mean, you could see people on the right, including Laura Loomer. She's calling for the attorney general to be fired. This is not over, because the fact that these documents are not out means that these conspiracies will live on.
MATTINGLY: Elliot, to your point. Have you seen -- I don't know. I'm so befuddled that were in this place. But it's a very real thing. Does this put an end to it? Do you think it works, or is this just spawned new theories?
WILLIAMS: No, I don't -- I don't think it is. And to be clear, I've been quite critical of the attorney general here for the last few minutes. This -- this is far bigger than that. And this is America and its willingness to accept lies on the internet and false conspiracy theories.
This is why people sort of don't trust institutions generally. There's all kinds of research on this right now. But this is really the Internet and falsehoods and lies that are out there. People have bought into this, you know, look, you know, not far from my home where I'm sitting right now, a guy showed up at a pizza place thinking that there was a child sex ring held there because of this kind of nonsense that's on the Internet.
This whole Jeffrey Epstein story fits perfectly into that. So no, I don't think this is the end of it. You know, I think it's corrosive to us in the media who speak about these, these issues and try to present some measure of truth. But no, I do not, sadly, think this is the end of any of this.
MATTINGLY: Evan Perez, Elliot Williams thanks, guys. Appreciate it.
My thanks also to my panel.
Jake Tapper is standing by for "THE LEAD".
Jake, have a great show.
