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The Story Is with Elex Michaelson

Trump En Route to China for Talks with Xi Jinping; British Prime Minister Keir Starmer Fighting to Remain in Power; Sam Altman Testifies in Landmark A.I. Trial; Top Executives Going to China with Trump; U.S.-China A.I. Battle Accelerating Industry Growth; Karen Bass Responds to Spencer Pratt; The Shadowy Network of Chinese Oil Refineries Funding Iran. Aired 12-1a ET

Aired May 13, 2026 - 00:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[00:00:00]

ELEX MICHAELSON, CNN ANCHOR: Is he willing to take a pay cut. The Lakers would like to have him back but they also got to pay Austin Reeves. They're already paying Luka Doncic a max contract. And at 42 years old, is LeBron James worth $50 million a year? So the question is, will he take a hometown discount to play with his son and stay with that team? If he's not, who is willing to pay him $50 million a year? Probably not a lot of folks out there.

Does he take a small deal to go with Cleveland Cavaliers, the Golden State Warriors, who knows? I think they'll ultimately probably comes back to the Lakers.

LAURA COATES, CNN ANCHOR: Maybe a good question for the L.A. mayor tonight. I mean, you have her on your show. Have a good one.

MICHAELSON: Thanks so much, Laura. Have a good night.

THE STORY IS starts right now.

(BEGIN VIDEOTAPE)

MICHAELSON: Stake summit. Air Force One on its way to China for a meeting between President Trump and President Xi. We're live in Beijing.

THE STORY IS A.I. on trial. The head of OpenAI, Sam Altman, on the witness stand fighting back against Elon Musk. CNN's Hadas Gold was in the courtroom today and is with us live tonight.

And THE STORY IS a CNN exclusive. I go one on one with L.A. Mayor Karen Bass, who responds for the first time to these viral ads.

UNIDENTIFIED FEMALE: This is a machine.

MICHAELSON: Her opponent, Spencer Pratt, is sharing out.

(END VIDEOTAPE)

ANNOUNCER: Live from Los Angeles, THE STORY IS with Elex Michaelson.

MICHAELSON: And welcome to THE STORY IS. I'm Elex Michaelson.

Our top story tonight is President Trump's trip to China. The president leaving behind a souring economy at home and stepping onto the world stage, hoping to end the war with Iran, which critics are calling a stalemate. The president will meet with Chinese leader Xi Jinping on Thursday and Friday before leaving Washington. President Trump said he doesn't think about the financial situation of Americans, only that Iran should not get a nuclear weapon.

The comments come as inflation in the U.S. rose to 3.8 percent in April, the highest in nearly three years. A new CNN poll shows 73 percent say current economic conditions in the U.S. are poor. Only 27 percent describe them as good. President says he will have a long talk with his Chinese counterpart about the Iran war, but he downplayed the need for China's help in ending the conflict.

(BEGIN VIDEO CLIP)

UNIDENTIFIED REPORTER: Do you think President Xi can help and contribute to a deal with Iran?

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: He could. I mean, it might be. I don't think we need any help with Iran, to be honest with you. They're defeated militarily, and they'll either do the right thing or we'll finish the job.

(END VIDEO CLIP)

MICHAELSON: Lets go live to the Chinese capital. Chinese Beijing bureau chief Steven Jiang.

Steven, how has Beijing prepared for this meeting?

STEVEN JIANG, CNN BEIJING BUREAU CHIEF: Well, Elex, I think one thing they didn't prepare is to making the sky blue. As you can see behind me, it's a very smoggy day here in Beijing, but perhaps quite fitting as we all try to seek more clarity in what each side wants out of this summit.

Now, you know, we've seen some changes or security sort of changes on the ground already, even though the president's plane is still hours away from touching down here in the capital. For example, one of the most famous and popular tourist attractions in the city, the Temple of Heaven, closed to the public for a few days now. And that, of course, is an indication this is one of the president's stops in the city.

And also a hotel not far from the U.S. embassy, totally cordoned off with a heavy presence of Chinese soldiers really guarding the premises and surrounding areas, including some businesses and restaurants. And -- but the thing is, this kind of disruption really pales in comparison to the potential disruptions to global trade and international order if this summit doesn't go well, because we are talking about a meeting between two superpowers, between two leaders who are perhaps even more powerful and more unconstrained in their own country now.

So one indication of the top items of the agenda is the Treasury Secretary, Scott Bessent, is actually right now, as we speak, meeting with his Chinese counterpart in Seoul ahead of the presidential summit here in Beijing, presumably trying to hash out some last-minute deliverables from this summit. And this is also another indication of how priorities have changed in this relationship over the years because of Mr. Trump's personal interest or disinterest, but also his policy focus, because this is very much dominated by trade and economic issues now.

And of course, as you've just heard, the president, he said he doesn't need Chinas help on the Iran war. But it's all but certain he is going to ask Xi Jinping to do more to pressure Iran, one of China's closest partners. And so far, the Chinese support for Iran have been largely rhetorical. Maybe they are waiting for that in-person ask from the president to actually do more so they could highlight a deliverable from this summit as well.

[00:05:00]

So, you know, with this kind of meetings, the list of what they want to discuss and what they want to touch on at least is always long and varied. But the bottom line here is this meeting is not going to or unlikely change -- unlikely to change this trajectory of this relationship that's been going on for a while and where it's headed in terms of this competitive nature, this rivalry between the two countries.

So both sides in a way just want to have this, you know, temporary stability, if you will, to prolong this stability they have achieved last October through this tariff truce. So both sides can address their own strategic vulnerabilities. For the U.S. obviously, it's about addressing supply chain risks on things like rare earths, which are even more important given the fast depletion of U.S. munitions.

For China, of course, they are all about tech self-reliance because of Washington's export controls targeting China. So at the end of the day, I think it's not hard to imagine that Xi Jinping is just willing to spend billions of dollars to buy more American agricultural products and Boeing jets, for example, to give Mr. Trump some deliverables to sell to American voters ahead of the midterm elections in the U.S.

So they can have this, you know, extension of this stability they have achieved through the tariff truce -- Elex.

MICHAELSON: Steven, thank you so much. We know Air Force One already in the air, touched down in Alaska for refueling. Now back up in the air once again.

Susan Shirk is a former U.S. deputy assistant secretary of state. She is now chair emeritus of the 21st Century China Center at the University of California, San Diego, UCSD.

Susan, welcome to the show. SUSAN SHIRK, FORMER U.S. DEPUTY ASSISTANT SECRETARY OF STATE: Thank

you.

MICHAELSON: I know you say in the past, when you were working in the State Department, there would be a lot of meetings amongst mid-level folks for hours and hours and hours to prepare for this sort of thing. You say right now, it's a lot more about the principles getting together and feeling each other out. There isn't as much of the prep work, and that means there could be some surprises, right?

SHIRK: That's right. When I was in the Clinton administration decades ago and Jiang Zemin came to the United States and to be followed by a state visit by President Clinton to China, the mid-level people like me, the deputy assistant secretary of state, we put in hours with our Chinese counterpart discussing the agenda for the meeting, what each side wanted to achieve. And those discussions were extremely valuable, not just in achieving what looked like a successful meeting, but also in building a foundation of better understanding for solving problems in the future.

But the lack of preparation now makes this meeting between the two leaders when they actually meet face to face a real wild card. And as you say, there could be some interesting surprises, I don't think -- I think the most likely thing is the extension of this kind of economic detente between the two sides. And to try to make it more durable into 20 -- through 2026 to 2027, or even longer. But there could be surprises related to other issues, especially Taiwan.

MICHAELSON: Yes. And to that point, how is Taiwan potentially on the table? And what could happen on that front?

SHIRK: Well, I was just recently, two weeks ago, in China and what I heard from the Chinese side is that Xi Jinping would really like to get the United States to commit, actually to halt arms sales to Taiwan, or at least to reduce their scale and to delay the transfer of those weapons. And, of course, we've been focused on the declaratory policy, you know, where we, are they going to push us to say we oppose Taiwan independence rather than just not support Taiwan independence, but the provision of arms sales is actually a lot more significant.

And I think that, it's not impossible that Trump might agree to that, especially if he can get the Chinese side to agree to exercise their own reciprocal restraint in the military pressure that they have been putting on Taiwan, crossing a midline, sending a lot of ships and planes around Taiwan.

[00:10:10]

MICHAELSON: Susan Shirk, it's going to be interesting in the next few days. And we'll have coverage of it right here on THE STORY IS every step of the way. We appreciate your insight tonight from San Diego. Thanks so much.

SHIRK: Thank you.

MICHAELSON: Britain's embattled prime minister is making it clear that he has no intention of resigning, despite a revolt from inside his own party. More than 80 Labour members of parliament have called on Keir Starmer to step down. Four junior ministers have resigned, citing a lack of leadership. However, more than 100 other Labour MPs signed a statement backing the prime minister, saying this is no time for a leadership contest.

Britain's deputy prime minister says he fully supports his boss and points out that so far no potential rival has the numbers to challenge Keir Starmer.

(BEGIN VIDEO CLIP)

DAVID LAMMY, DEPUTY BRITISH PRIME MINISTER: It's been 24 hours now and nobody has come forward to put themselves forward in the processes that exist in the party. Let's get on with the business of running this country and government. That's what I've been doing today. That's what the prime minister has been doing.

(END VIDEO CLIP)

MICHAELSON: Reaction now from the British public.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I think he's tried to steer like a middle of the road sort of passage to try and keep everyone happy, even though I'm not -- personally I'm not a fan of his. But I think he's been holding back the more sort of left radical side of his party for a while.

UNIDENTIFIED FEMALE: I think he's just being blamed for everything because it's easy, isn't it? He's an easy target. I don't think he has the personality to carry off being a prime minister.

UNIDENTIFIED MALE: I think he's competent, but I don't think he has a lot of backbone. That's his basic problem.

(END VIDEO CLIP)

MICHAELSON: Now to Capitol Hill where FBI director Kash Patel sparred with a lawmaker at a Senate hearing that was meant to focus on the bureau's budget request for next year. FBI director Kash Patel sparred with a lawmaker at that hearing. Democrats took the opportunity to grill Patel on the numerous controversies swirling around his leadership, including allegations of misusing FBI resources, unexplained absences, and allegations of excessive drinking.

(BEGIN VIDEO CLIP)

SEN. CHRIS VAN HOLLEN (D-MD): Are you willing to take the test that -- it's called the audit test that members of our active duty military and others take to determine whether they have a drinking problem?

KASH PATEL, FBI DIRECTOR: I'll take any test you're willing to take.

VAN HOLLEN: I will take it, Director Patel. I'll take it. You ready to take it? PATEL: Lets go.

VAN HOLLEN: Yes or no?

PATEL: Let's go. Side by side.

VAN HOLLEN: I'll take it. I will say --

PATEL: Unlike baseless reports, the only person that was slinging margaritas in El Salvador on the taxpayer dollar with a convicted gangbanging rapist was you.

VAN HOLLEN: You know, the fact --

PATEL: The only person that ran up a $7,000 bar tab in Washington, D.C., at the lobby bar was you.

VAN HOLLEN: Director Patel, this suggests to me --

PATEL: I will not be tarnished by baseless allegations and fraudulent statements from the media.

VAN HOLLEN: Let me ask the questions. The fact that you mentioned that indicates you don't know what you are talking about.

(END VIDEO CLIP)

MICHAELSON: "The Atlantic" recently published a story alleging that Patel has alarmed colleagues with episodes of excessive drinking and unexplained absences. Patel has since sued "The Atlantic," denied the claims and said he has never been drunk at work.

Still to come, the CEO of OpenAI takes the stand in a legal battle with Elon Musk here in California. Why the case is so important to Sam Altman's future with the company. Just ahead, we'll talk to CNN's reporter who was inside the courtroom.

Plus, while Americans struggle with rising inflation and high gas prices, President Trump suggests money is no object when it comes to winning the war with Iran. You'll hear his thoughts on the state of the economy.

(COMMERCIAL BREAK)

[00:18:25]

MICHAELSON: OpenAI's CEO Sam Altman has taken the stand to defend himself against Elon Musk as the landmark trial for the A.I. superpower nears its end. Attorneys for Musk grilled Altman on Tuesday over his business practices and trustworthiness while leading the company, which created ChatGPT. He was also questioned over his brief ousting as CEO back in 2023.

Musk's lawsuit aims to remove Altman and OpenAI president Greg Brockman from the company's board. He also wants the judge to order OpenAI to revert to operating solely as a nonprofit. CNN A.I. correspondent Hadas Gold was in the federal courtroom in

Oakland today, joins me live right now.

Hadas, welcome to THE STORY IS.

HADAS GOLD, CNN A.I. CORRESPONDENT: Great to be with you, Elex.

MICHAELSON: What was your big takeaway from the trial today?

GOLD: The biggest thing I took away from the trial today was how much Elon Musk's attorneys try to focus on Sam Altman's character and whether he could be trustworthy. Their first question out of the gate when they got their chance to ask him questions was, are you completely trustworthy? And then they went through a laundry list of allegations from several former OpenAI board members, especially around that 2023 ousting you mentioned where they accused Sam Altman of deceiving them, of being dishonest.

And they kept going through every single one of these accusations, really trying to hammer it to the jury, like, listen to all these people who don't think that Sam Altman could be trusted. Altman finally getting a chance to defend himself said that he considers himself to be an honest business person and that a lot of those issues he chalked them up to misunderstanding?

[00:20:00]

Now, the question is, you know, all of these attacks on Sam Altman's character, will that translate for the jury over to these allegations that Elon Musk has made about OpenAI structure, and whether Elon Musk was deceived when he helped fund and co-found OpenAI. And he is now saying he was deceived because OpenAI started as a nonprofit. And now Elon Musk saying it's actually more of a for profit venture. OpenAI will say they're still run by a nonprofit foundation.

I think we have a clip of both sides' attorneys right after the testimony today where you can really hear how they're laying out their sides of how they saw today really going.

(BEGIN VIDEO CLIP)

MARC TOBEROFF, ATTORNEY FOR ELON MUSK: In fact, today Mr. Altman's testimony confirmed that there can be no doubt that he repeatedly lied, including about essential A.I. safety members.

WILLIAM SAVITT, ATTORNEY FOR SAM ALTMAN: And what happened today in court was interesting. It's what happens when one side has no evidence for the proposition they are seeing. It resorts to character assassination, lies and accusations from the mouth of a lawyer. And what you didn't see at all today was actual evidence of anything relevant to Mr. Musk's claims.

(END VIDEO CLIP)

GOLD: Altman testified, for his part, that Elon Musk actually wanted to control OpenAI, that he actually pushed at one point for OpenAI to be to become a part of Tesla, and that when he failed to gain control, he stopped donating and then left, and then eventually started his own competitor, xAI. That's one of OpenAI's main defenses here. They're saying this is just Elon Musk trying to bring down a competitor.

Altman tried to show that Musk was on board, actually, with having a for profit entity in some way, and was in active discussions about the equity of that for profit venture, but that he wanted to have the majority control of that. At one point, Sam Altman testified kind of a weird exchange he said that happened with Elon Musk, where Musk was asked, OK, well, if you were to gain control, what would happen if you were to die?

And that Musk answered that then his control would go down to his children. And Sam Altman said that this was sort of a hair-raising possibility and that he was not really comfortable with that. So an interesting exchange today. Sam Altman was overall pretty calm on the stand. There weren't a ton of fireworks, but the question is, of course, what the jury thinks and what the judge will ultimately think because they'll be the ones that will get to decide.

MICHAELSON: Elon Musk has been a big fan of reproducing plentifully, so he's got lots of kids to choose from.

Let's talk about this big trip to China, which is our lead story. President Trump on the way right now on Air Force One. And some news in terms of who's going with him. Jensen Huang of Nvidia, last-minute add.

GOLD: Yes. Jensen Huang was not initially on the list of many tech CEOs who were invited, including Elon Musk and Tim Cook. But then we got news from the reporters who are traveling with the president that Jensen showed up in Anchorage and is joining the trip on Air Force One. Seems to have been a late addition. Semafor reporting that President Trump read the reports that Jensen Huang was not coming, was not invited, and decided to call him and invite him last minute.

We also just got this Truth Social post from President Trump within the last hour or so, where he, you know, gives a hint of what he's going to try to do with all these tech CEOs with him on this trip to China. And, you know, keep in mind, these are a lot of hard tech CEOs, not a lot of A.I. CEOs. We're not seeing, you know, Sam Altman and, you know, these big A.I. CEOs joining President Trump.

This seems to be a signal that this focus is about trade. So President Trump posted on Truth Social that he'll be, "asking President Xi, a leader of extraordinary distinction, to open up China so that these brilliant people can work their magic and help bring the People's Republic to an even higher level. In fact, I promised that when we are together, which will be in a matter of hours, I will make that my very first request. I have never seen or heard of any idea that would be more beneficial to our incredible countries."

And one of the reasons I think you're hearing this sort of -- this from President Trump is because the U.S. can no longer assume that it has the higher ground in negotiations with China. Take a look at this new report out of Stanford. (BEGIN VIDEOTAPE)

TRUMP: And we're leading China in A.I. And I'm going to go see President Xi in two weeks. I look forward to that. But I'll say I'm leading. We have --

(LAUGHTER)

TRUMP: We have friendly -- we have very friendly competition.

(END VIDEO CLIP)

GOLD (voice-over): That was President Trump recently commenting on the A.I. race between the U.S. and China. But according to Stanford's 2026 A.I. index, produced by the university's Institute for Human-Centered Artificial Intelligence, the gap in A.I. performance between the two nations has now effectively closed.

VANESSA PARLI, INSTITUTE FOR HUMAN-CENTERED ARTIFICIAL INTELLIGENCE, STANFORD UNIVERSITY: The gap is very small, and then the U.S. model will release and it'll perform a bit better. And then the Chinese models will catch up. And that's the trend that we have been seeing over the past year.

GOLD (voice-over): Take a look at this chart. American and Chinese A.I. models are now effectively neck and neck on key performance benchmarks. The report finds the U.S. still leads in top tier model releases.

[00:25:02]

But China leads in research publications and robotics deployment. Many experts are closely monitoring the trend.

HENRY SHEVLIN, ASSOCIATE DIRECTOR, LEVERHULME CENTRE FOR THE FUTURE OF INTELLIGENCE, UNIVERSITY OF CAMBRIDGE: Robotics is an area where I think Chinese innovators have been doing phenomenally impressive work. There are some areas in which I think China is also arguably been leading the way. So in advanced video generation, for example, several Chinese models have been absolutely state of the art.

GOLD (voice-over): The Stanford report also says the U.S. still invests far more money in the field than any other country. Private investment in the U.S. totaled more than $280. Billion last year, about 23 times more than China's $12 billion.

PARLI: In between 2024 and 2025, we saw almost double the corporate investment global or the private investment globally around the world. That is largely driven in the U.S., though other countries such as China do have more public investment.

GOLD (voice-over): China's DeepSeek recently unveiled its new model V4. The startup took the global A.I. industry by storm last year with its groundbreaking release of the R1 model. It delivered near industry leading performance at what DeepSeek said was a fraction of the cost. Unlike R1, which uses Nvidia chips, the V4 is running on domestically produced chips following restrictions on China's access to cutting edge American chips such as Nvidia's Blackwell under Washington's export controls.

JEFFREY DING, ASSISTANT PROFESSOR OF POLITICAL SCIENCE, GEORGE WASHINGTON UNIVERSITY: And they've developed efficiency innovations to try to squeeze more performance out of less cutting edge chips. And so in some ways, the export control constraints have forced Chinese companies to innovate in a unique way.

GOLD (voice-over): And unlike most American A.I. labs, many Chinese firms have also embraced an open source strategy, making their internal model weights available for anyone around the world.

DING: Their strategy is build up a community ecosystem and to try to take advantage of the network effects that come from building that open source ecosystem as a way to catch up.

GOLD: Meanwhile, the White House is accusing Chinese A.I. firms of copying American models through what it calls industrial scale campaigns. At the center of the allegations is a process known as distillation, a technique used to transfer knowledge from one model to another. But Beijing firmly rejecting the claims, saying such allegations are groundless and are deliberate attacks on China's development and progress in the A.I. industry. As the world's two largest economies push to dominate A.I., the competition is only intensifying.

(END VIDEOTAPE)

GOLD (on-camera): And, Elex, another interesting part of this trip to China is White House officials have also said that they may be trying to be opening some channels of what they call deconfliction with China on A.I., to maybe try and avoid some sort of crazy A.I. arms race. That's where we are today.

MICHAELSON: Such an important issue. Hadas Gold, thanks for covering all that, working overtime on multiple stories for us late at night. We appreciate it. Thank you so much.

Up next, the Los Angeles mayor's race heats up ahead of June's nonpartisan primary. Incumbent Karen Bass speaks with me about her opponent, reality TV star Spencer Pratt, and those ads that have been seen hundreds of millions of times. What she thinks about it all, next.

(COMMERCIAL BREAK)

[00:33:00]

MICHAELSON: Welcome back to THE STORY IS. I'm Elex Michaelson. Let's take a look at today's top stories.

President Trump is on his way to Beijing for two days of talks with Chinese leader Xi Jinping. The war with Iran is expected to dominate their discussions. Before leaving, the president brushed aside concerns about the U.S. economy, saying he doesn't think about Americans' financial situation when negotiating with Iran.

The number of hantavirus cases linked to a cruise ship is now up to 11. The World Health Organization says all those cases are among passengers or crew and include three deaths reported early in the outbreak. All passengers are now off the ship, and it's headed to the Netherlands to be disinfected. The WHO says the risk to global health is low and there is no sign of a larger outbreak.

Conan O'Brien will return for a third straight year to host the Academy Awards show in 2027. The former late-night TV host drew positive reviews and helped to increase viewership of the Oscars from the lows of the pandemic era. ABC announced O'Brien's return on Tuesday. Disney owns ABC and Hulu, which will stream the next Oscars ceremony in March. Remember, it goes to YouTube in 2029.

Now to the race for L.A. mayor, which is making national headlines. I caught up today with L.A. Mayor Karen Bass for an upcoming profile piece at the Saint Vincent's Behavioral Health Campus. More on that in the week ahead. We discussed her opponent today, reality TV show star turned community advocate Spencer Pratt, who decided to run for mayor after his home burned down in the Palisades Fire, something he blames Bass for.

Pratt has been sharing out A.I. generated ads that show him as a comic book hero, and Bass is various villains. They've gotten millions of impressions. Last week, Pratt and Bass debated on local TV. It was Bass's first time ever meeting Pratt, and it's something we talked about today.

(BEGIN VIDEOTAPE)

MICHAELSON: What did you make of his debate performance?

KAREN BASS, INCUMBENT CANDIDATE FOR LOS ANGELES MAYOR: Well, first of all, I was surprised he was civil because there's been nothing civil about him, you know, before.

[00:35:06]

I've never met him before, so I only knew of his media presence and his social media presence. And I'm sorry, but, you know, reality TV is not something I have followed. So I'd never heard of his ills and I've never heard of Spencer Pratt before. And he's become quite famous over these last few months.

MICHAELSON: What do you make of his campaign and much of it now relying on A.I., showing you as the Joker, showing you as Darth Vader, him sharing out other people's A.I. that shows that. What goes through your mind when you see that?

BASS: Well, actually, I think it's a very dangerous trend. One, because it is absolutely 150 percent fiction. But what's worrying me now is that his social media is now taking on a violent turn. And that worries me because when you do that and when your messages are so hateful, or when you demonize people, then you do provoke people who are unstable and you can jeopardize people's safety. MICHAELSON: You mean like the throwing of the tomatoes?

BASS: Well, the throwing of the tomatoes, which look like blood or drowning me in the governor in -- in a reservoir. But there's also other violent scenes. And so I've noticed that it's taking on a violent trend and that I find to be very scary. But I do know that he has become wildly famous again. But a lot of his support, I don't know how much of it is in L.A..

MICHAELSON: Yes. There's no question that there's a lot of support coming from national folks that are not voting in Los Angeles.

BASS: All of it. Right.

MICHAELSON: But there also are people in L.A. that seem drawn to him.

BASS: Absolutely. That's right.

MICHAELSON: Including some Democrats that are drawn to him. What do you think that's about?

BASS: I think that we are going through a moment which is not unfamiliar. We go through moments where across the board voters are just upset. And I worry that social media, like what he is proposing and then casting himself as a Superman, let's see, he's Batman. He's whoever the savior was on some of the other superhero movies. You know, I think that plays into people's desperation. And I think oftentimes we look for somebody superhuman to save us. The reality is it never happens. Those are fictional characters.

MICHAELSON: Do you -- what do you think Spencer Pratt would be like as mayor?

BASS: I can't even imagine. I don't think -- I understand he has a degree in political science, but he does not have a background or knowledge in how our government works.

MICHAELSON: You know, Hillary Clinton wanted to run against Donald Trump. Is there a chance that maybe Spencer Pratt is being underestimated?

BASS: Absolutely.

MICHAELSON: And maybe he's not the best person to run against?

BASS: No, absolutely. I mean, I take nothing for granted.

(END VIDEOTAPE)

MICHAELSON: A lot to unpack there. Joining me now for our political panel, former Democratic candidate for governor and former California state assembly majority leader Ian Calderon, and California state assembly Republican David Tangipa.

Welcome both to you for THE STORY IS. Let me start with you. What do you make of what Karen Bass just said? IAN CALDERON, FORMER DEMOCRATIC CANDIDATE FOR CALIFORNIA GOVERNOR: I

mean, you have to take into consideration that we're at a political point in time right now where you have to consider violence and you have to consider safety. Things have happened, and you have to be careful with what you say and how you present information. But you're also dealing with a generation of people that have been exposed to this quite often. And it's becoming a larger part of just the discussion now.

And I think you're going to see a lot more of this in campaigns. And Spencer Pratt is doing what he knows best, which is to create controversy. And when you create controversy, you create tension. But it was really interesting to hear Karen Bass, Mayor Bass say, well, you know, we have -- you always expect the superhero to show up, but that doesn't happen in real life. But the elected official, the mayor, you're supposed to be that superhero.

And I think that that's why you're seeing this interest in Spencer Pratt and his campaign and his candidacy, because his message is landing, because people, they feel desperate. Things just keep getting worse every single day. And, you know, they want somebody to help them and save them from this.

MICHAELSON: They want a superhero.

CALDERON: They want one.

MICHAELSON: Yes. That's why people like superhero movies. What did your reaction to that and Spencer Pratt and his chances?

DAVID TANGIPA, CALIFORNIA STATE ASSEMBLY REPUBLICAN: Yes, for me, I think what Spencer is doing is he's being L.A.. He is being California and the A.I. stuff, I mean, I think Mayor Karen Bass is really showing in that interview is even her general understanding of where the world is at when it comes to A.I.. And I mean, she probably thinks that all the funky alligator videos and everything else that's out there, all these animal videos, are real, and it might fool her, but because no one is going to look at a bat -- a Batman and tomatoes being thrown at a fake judge thing and say, I've got to go and take action.

[00:40:09]

But what Spencer is really doing is making sure that, one, one of the most important things is getting his name back out there and talking to people. And whether it may be national, but also here in the local area. And I think everybody also sees L.A.. L.A. is Hollywood. L.A. is entertainment, and Spencer is dominating that. He's not running a Democrat, Republican or independent campaign. He's running that he's the most pro-L.A. person out there. He understands Southern California and he will get his name out there.

MICHAELSON: But L.A. is also deeply blue. And if Spencer Pratt is the general election candidate, there will be all sorts of ads that your friends are going to run that will say Republican Spencer Pratt over and over and over again and try to tie him with Donald Trump, although when I asked her about the idea that you may not be the one you want to run against, you were nodding your head. I mean, you think that Spencer Pratt is being underestimated?

TANGIPA: I think Spencer Pratt is being massively underestimated because I think when you see an area that is as deep blue as L.A. and people are seeing that dogs are being overdosed on Skid Row, they see that their streets are filled with homeless people, that there's so many needles that their kids can't go to safe schools, and it's so blue all over the place, they know whose fault it is. And then they're going to say, well, maybe let's try something different.

That is the same thing that happened in New York when Mamdani wanted to come out and say, I'll do something different. And then maybe that's what happens in New York. But now Spencer Pratt says, you've seen what 100 percent Democrat control and Democrat Party has given you, full homelessness, dogs being overdosed. Let me try something different.

MICHAELSON: So you think he's got a shot? Real quick, do you think he's got a shot?

CALDERON: I think he's got a shot. But, I mean, it is, I mean, we are dealing with politics and voters are ultimately going to feel more comfortable going with what they know.

MICHAELSON: So let's talk about something you know, which is the governor's race because you were in it and you ran against all these people and then dropped out of the race. Now it appears that Xavier Becerra, who is the former HHS secretary, former attorney general of California, seems to be the frontrunner according to recent polling and seems to be pulling ahead along with Republican Steve Hilton.

And there was an interview that he gave with KTLA, a local station on Nexstar, where there was a moment that got millions of views today online, and we're going to put the transcript of what happened. He was talking to a reporter named Annie Rose Ramos, and he said, "By the way, this is a profile piece. It's not a gotcha piece. Right?" She said, "Well, look, I think these are questions are fair. It's in order to learn about you as a candidate."

Becerra said, "So long as it's about the profile." Ramos said, "I don't know what you define profile, but I'd like to begin the interview." And he said, "The way I describe profile is you talk about all the things I've done, things I want to do, and along with some tough questions, but not only tough questions." This thing went all over the place today. A lot of high profile Democrats on the national stage, a lot of Obama folks mocking Becerra. These are people that worked with him in HHS and do not have great things to say about his performance.

CALDERON: Yes, it was not a good day for Xavier Becerra today. And it just shows that, you know, he's -- this has been a race that has been very unpredictable. And this is just something that he should have been prepared for. You don't get to be able to go into an interview and dictate the questions that you're going to be asked. And the leadership is being able to sit there and take the tough questions and have the right answers in order to respond.

And that's just not what happened today for Xavier. And it's going to be difficult for him to, I think, shake this one.

MICHAELSON: How do you see the status of the governor's race right now?

CALDERON: I mean, it's -- people have already started to vote. And so, you know, you want to say it's still wide open. If something -- this maybe makes it a little bit more competitive between himself and Steyer, but I'm just going to be very curious how accurate is the polling right now. You know, are we seeing an accurate representation?

I mean, David, you and I were talking about, you know, this earlier, but I just don't know that it's going to be such an easy win for Steve Hilton. I think Chad Bianco is going to be a little bit more competitive than people are giving him credit for on the Republican side.

MICHAELSON: And you endorsed Steve Hilton on the Republican side. How do you see the governor's race?

TANGIPA: Yes, I do think it's actually significantly more wide open right now than most people think. I mean, we have two prominent Republicans, and then you have all of these Democrats, which things are shifting. I mean, think about it. A month ago, the front runner was in Congress and was leading and taking away. Now he's no longer even in Congress.

MICHAELSON: Eric Swalwell, who Ian Calderon had endorsed.

TANGIPA: Yes.

CALDERON: Thanks for reminding me.

(LAUGHTER)

TANGIPA: Political memories are very, very short. And with people having their ballots right in front of them, they're paying attention and they're saying, who's going to give me the ideas that I want to see California -- that we want to see in the future, going into the general as well. So I do think it's up in the air.

I do support Steve. I think Steve has got a platform when it comes to the Golden Together policy. He's got a lot of people that he's working with. But I also see Chad as a very formidable opponent because Chad is a sheriff and people crave safety right now. On the Democratic side, Steyer has spent over $100 million, and he still can't even get over 11 percent to 15 percent.

[00:45:03]

So there's something wrong there. But how many people is he reaching? And now how many people left Eric Swalwell and are just like, I don't know who I'm going to choose, but I'll just choose the name that I'm most familiar with?

CALDERON: But I also think it's a little bit more than that. I also think it's a little bit more than that. I think it's also people want to feel like there's going to be some stability. I mean, you have Gavin Newsom, he's the governor. You know what you're getting with Gavin Newsom. And he is one of the most skilled politicians of our time. And so they have a level of comfortability after what happened with Eric Swalwell, those voters shifted over to Xavier Becerra. And unless something significant happens, maybe it's this interview, they're likely to stay there.

MICHAELSON: Yes, because they were looking for something comfortable. But the question is, how does that second look look?

CALDERON: Yes.

MICHAELSON: Great to see both of you, guys. Thank you so much. Really appreciate it.

We'll be back with more of THE STORY IS right after this.

(COMMERCIAL BREAK)

[00:50:29]

MICHAELSON: As the U.S. and Israel's war with Iran drags on, American households now find themselves battling inflation. Consumer Price Index reports U.S. inflation rose to 3.8 percent in April, the highest since May 2023. For the first time in three years American wages are no longer outpacing inflation. Before departing for China, President Trump had this to say about the state of the economy.

(BEGIN VIDEO CLIP)

TRUMP: Our inflation is just short term because if you go from before, just before the war, we were, for the last three months, 1.7 percent. And now what you have is as soon as this war is over, you're going to see inflation go down to probably 1.5 percent. The only thing that matters when I'm talking about Iran, they can't have a nuclear weapon.

I don't think about Americans' financial situation. I don't think about anybody. I think about one thing. We cannot let Iran have a nuclear weapon.

(END VIDEO CLIP)

MICHAELSON: Meanwhile, the U.S. Energy Department raised their forecast for gas prices on Tuesday and warned that oil futures will likely stay above $100 a barrel in the coming weeks. This as officials now expect, Brent crude oil, the world's benchmark, will remain near $106 a barrel in May and June. You can see it's hovering around that mark right now.

Just a few hours' drive from where Chinese leader Xi Jinping will welcome President Trump this week sits a refinery that is allegedly part of a network helping fuel Iran's economy by importing oil.

CNN's Simone McCarthy reports.

(BEGIN VIDEOTAPE) SIMONE MCCARTHY, CNN SENIOR CHINA CORRESPONDENT (voice-over): As we drove to this oil facility three hours south of Beijing, it was soon clear we weren't welcome.

UNIDENTIFIED MALE: These guys are just trying to block the camera basically.

MCCARTHY (voice-over): A black van pulled up, blocking our view of one of the many refineries dotting China's coast.

Security here is really tight. This is a facility which is sanctioned by the U.S. government for allegedly importing Iranian oil.

(Voice-over): Iran sends most of its oil to China. That trade is in the spotlight ahead of President Trump's arrival in Beijing this week with the U.S.-Iran ceasefire under strain. The day before Trump departed for China, Washington blacklisted a dozen people and entities it says are linked to the trade of oil from Iran to China. Five Chinese oil refineries and multiple port terminals have been sanctioned by the U.S. since last year for allegedly importing Iranian oil.

The company we visited, Hebei Xinhai, was sanctioned last May. It declined CNN's request to be interviewed. It was hard to tell what kind of oil the plant was processing, but sanctions clearly hadn't shut it down. The U.S. has been increasingly imposing sanctions on Chinese entities it believes are involved in the trade of oil from Iran.

SCOTT BESSENT, TREASURY SECRETARY: They are the largest state sponsor of terrorism, and China has been financing them with their energy purchases.

MCCARTHY (voice-over): For its part, China doesn't acknowledge importing Iranian oil. It also rejects U.S. sanctions and has been pushing back. Earlier this month, Beijing ordered companies not to comply with sanctions on refineries.

Multiple ports south of me here, as well as across the ocean this direction, are believed to have continued to import Iranian oil throughout the course of the war.

(Voice-over): This oil is carried by a network of vessels, including those known as the shadow fleet. The oil is loaded in Iran and shipped out often to a floating gas station off the coast of Malaysia, where dozens of boats loiter with their tracking devices turned off. Trading sanctioned oil and ferrying it to buyers like those in China. CNN pinpointed one such transfer where the Iranian flagged vessel Herby transferred oil to a China bound tanker just last month.

Weeks later, the Herny was intercepted by the U.S. Navy on its way back to Iran. Once those ship-to-ship transfers are complete, ships heading for China blend in with thousands of other vessels regularly transiting through these waters. For the U.S., that's a major problem. But for China, this oil flow is powering its economy and keeping a close partner afloat. Simone McCarthy, CNN, Hubei Province, China.

(END VIDEOTAPE)

[00:55:01]

MICHAELSON: A new revenge thriller is being hailed as the first epic movie of the summer, and the star of that film joins us next hour. Stay with CNN for my conversation with actress Vivica A. Fox.

(COMMERCIAL BREAK)

MICHAELSON: We're now 30 days away from this year's first FIFA World Cup match here in Los Angeles. On June 12th, L.A. will host the U.S. Opening Ceremony. And right after that, Team USA will take on Paraguay in their opening match.

Magic Johnson is urging fans around the globe to make L.A.