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The Story Is with Elex Michaelson

War With Iran Impacting November Midterm Elections; Outrage Erupts In Ceuta As Migrant Crisis Drags On; Jurors To Return Thursday For 6th Day Of Deliberations; Newsom Tours Southeast U.S. As he Weighs 2028 Bid; PG&E to Cut Spending by $2B after Wildfire Bill Setback. Aired 1-2a ET

Aired September 03, 2026 - 01:00   ET

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

[01:00:02]

ELEX MICHAELSON, CNN ANCHOR: If you want a special $1 coin to celebrate the 250th anniversary of the United States, you'll have to wait. The first batch of the special currency featuring the face of the President of the United States, Donald Trump, went out of stock just hours after they went on sale on Wednesday. Although they are legal tender at a buck a piece, a roll of 25 coins will set you back $61, while a bag of 100 costs more than $150. The Mint's website says the coins can still be ordered while additional inventory is being made.

Thanks for watching. The next hour of The Story Is starts right now.

UNIDENTIFIED MALE: Live from Los Angeles. The Story Is with Elex Michaelson.

MICHAELSON: Thanks for being with us. I'm Elex Michelson, live in Los Angeles. It's 10 o'clock here on the West Coast.

Coming up, clashing over culture. How Pete Hegseth's overhaul at the Pentagon has led to new calls for his resignation. This amid renewed hostilities in the Middle East. Why President Trump says he is not concerned about the political fallout from the U.S. clashes with Iran.

And a recent migration crisis in a Spanish seaside town is raising alarms. Why people are demanding action, even though most of the migrants have returned home.

The top story this hour is the growing controversy surrounding the man in charge of prosecuting the war with Iran. We're talking about the United States Defense Secretary Pete Hegseth. And there is a scathing new appeal for President Trump to fire him.

Critics are taking issue with the way that Hegseth is managing the war with Iran. The Pentagon and military transformations into a modern fighting force. They say he's too focused on culture wars and removing military brass who do not align with his vision.

Wednesday was Army Secretary Dan Driscoll's last day on the job. According to "The Atlantic," before announcing his resignation, he brought his current concerns about Secretary Hegseth to President Trump directly in person. "The Atlantic" reports that Trump was surprised when Driscoll told him how many generals and other top officers had been purged, making it impossible for the army to transform itself the way that it needs to.

Adding to that, Republican Senator Thom Tillis of North Carolina, who, by the way, is on his way out and has felt free to speak his mind for some time now, is demanding that President replace Hegseth. Tillis was the decisive vote to confirm Hegseth in the first place. Here's what he posted on to X. "I have never witnessed more inept management of the brave men and women who serve our country. Hegseth is intimidated by competence and retreats to ginning up culture wars instead of soberly attending to the vital work of our national defense and health and well-being of our fighting force."

And the personnel shuffle military efforts continue in Iran. And we are learning more about what happened during the latest round of strikes between the U.S. and Iran on Tuesday. Two U.S. officials tell CNN American forces hit nearly 60 military targets around Iran, but they also escorted 40 commercial oil vessels through the Strait of Hormuz at the same time. U.S. forces reportedly fended off a range of attacks from Iranian forces from both the air and the sea during the escort. This comes in addition to other strikes the U.S. launched into Iran, including one attack.

Iranian officials claim hit a wedding celebration, killing four people attending the wedding. President Trump commented on the escalation in the region on Wednesday, noting that the upcoming midterm elections are not influencing his decisions when it comes to the military.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I don't know how much more they can take, but you know, whatever it is, it doesn't matter. And I'm not affected by the election. Number one, I'm not running. My party's running and I'm going to help my party. But I think my party respects the fact that we're not allowing Iran to have a nuclear weapon.

(END VIDEO CLIP)

MICHAELSON: The President also took to social media to make another suggestion about the Strait of Hormuz. He wrote in part, "Now that we have it under control, should we change the name to Trump Strait? It would be hotter than ever before." It's unclear if he's seriously considering that measure. Certainly sounds like a joke.

Our panel is back with us this hour. Republican strategist John Thomas and former Democratic lawmaker Ian Calderon. Thanks for being with us. All right. Let's start with the war with Iran. How is it impacting the midterms?

IAN CALDERON, FORMER CALIFORNIA STATE ASSEMBLY MAJORITY LEADER: I mean, I think it's significant. I mean, you had the original strike that was apparently a big success. We took out Iran's entire nuclear capability. But then you had President Trump just today saying, well, I don't know how long it's going to be. It might not be going on for that much longer. But we don't want Iran to have a nuclear weapon. Well, which is it?

And you have so much turmoil within the Pentagon and so many people questioning the leadership of Hegseth that, I mean, it's impacting us. It's impacting the costs.

MICHAELSON: How do you think the Hegseth stuff plays?

[01:05:00]

CALDERON: I just -- it's incompetence. And I think that the biggest issue that Trump is going to have is this idea that, you know, the people that he always continues to say, I put the best people in these strong positions of leadership. But they end up being like Hegseth. They end up being, you know, people that he ends up getting rid of and that can't deliver on the job.

MICHAELSON: President Trump, of course, standing by Pete Hegseth, at least so far. How do you think that plays? I mean, Thom Tillis, obviously, not a big fan of President Trump. Recently, we have not seen a lot of the Republicans that are calling out Pete Hegseth.

JOHN THOMAS, REPUBLICAN STRATEGIST: Well, I don't think the Secretary of War was brought in to hold the status quo. He was brought in to be a change agent. If you look at it by the numbers, I think Secretary Hegseth has done a good job. Recruitment are up. Tillis is upset about these culture wars.

Well, I guess culture wars of what, Hegseth demanding that our troops be fit and have minimum standard levels. And yes, a lot of the people within the management ranks seem to disagree with Hegseth. And he's either forcing them out or he's firing them.

I don't think President Trump sees a problem with that. President Trump fires people that disagree with him. And it seems like a lot of the fundamental disagreements from what I'm hearing.

By the way, Dan Driscoll, I think Dan never actually said he quit because of Hegseth. I don't think that's been confirmed. But the fundamental disagreement seems to be around the fact that Pete Hegseth believes that we need more drones and basically more robots fighting less troops.

And there seems to be this struggle at a management level. But at the rank and file, you're not hearing the troops on the ground complain about Secretary Hegseth.

MICHAELSON: It certainly sounds like Hegseth and Driscoll were not in alignment on everything.

THOMAS: It seems to be the case.

MICHAELSON: Don't you think?

CALDERON: There is a huge disagreement between the civilian leadership of the Pentagon and military leadership. Civilian leadership, they want to continue on the war. Military leadership is saying we shouldn't. We're depleting our munitions. We're spending a lot of money we don't have already over $37.5 billion.

That's a ton of money. The Navy, I don't know if you just saw this, but the Navy is saying that they're having to pull money out of their payroll to pay for these operations out of the Middle East. That is that sounds pretty dire to me.

MICHAELSON: John, as a Republican strategist who works with Republican campaigns across the country and builds ads and build slogans and all the rest of this, how is the war playing and is it really hurting your efforts?

THOMAS: It is. And it's for two reasons. One is President Trump didn't run as being a wartime president. So it's a little antithetical to his brand.

MICHAELSON: And it's the opposite, saying he was going to stay out of stupid wars in the Middle East and mock George W. Bush for getting involved.

THOMAS: That's right. But I think the bigger problem, and the war isn't particularly popular right now, but the bigger problem.

MICHAELSON: Isn't popular at all, like very unpopular.

THOMAS: Agreed.

MICHAELSON: Yes.

THOMAS: The bigger problem, though, actually, what concerns me as a strategist is not the popularity of the war or yes or no. It is that it distracts the American people and President Trump from staying on message, which is talking about what he's trying to do to help everyday Americans on the economy and things that matter to them on a day to day basis.

MICHAELSON: Well, and speaking of that message, we got campaign ads for the midterms from President Trump and his team, and they have a lot to do with President Trump. So listen to this. And this is Dana White, the head of UFC, lending his voice to this.

(BEGIN VIDEO CLIP)

DANA WHITE, PRESIDENT AND CEO, UFC: He is the toughest, most resilient person that I've ever met, and nothing was going to stop him from fighting so hard for the country he loves.

TRUMP: We gave you no tax on tips, no tax on overtime and no tax on Social Security.

We're telling the major tech companies that they have the obligation to provide for their own power need so that no one's prices will go up.

UNIDENTIFIED MALE: He's fighting for you every day. Help him finish the job.

(END VIDEO CLIP)

MICHAELSON: So President Trump's name is not technically on the ballot. He has said to his voters, pretend my name is on the ballot. And it certainly looks like the ad campaign is suggesting that.

THOMAS: Well, he's taking the gamble that President Trump is a unique politician that can shift the turnout model and move more Republicans to the polls. And what these early ads are doing is they're trying to bolster President Trump's numbers with his base.

I think a CNN poll last week showed not that the President is losing Republicans. They're still with him. But the intensity has lessened. So these --

MICHAELSON: It went from like 90 to 80.

THOMAS: Correct.

MICHAELSON: Yes.

THOMAS: So but that 10 percent is meaningful. So these ads are trying to gin up the intensity of President Trump's base. And then I expect he'll go negative and start beating up individual Democrats.

MICHAELSON: I mean, for Democrats, love the idea of President Trump making this election about himself.

CALDERON: Absolutely. I mean, we do love that. I mean, but also the Economist had a poll that talked about, you know, do you feel like the economy is going in the right direction, where 13 percent of those polled said yes and 57 percent said no.

This is the bread and butter of what they're going to have to message around to try to win these races, especially because the polling being so close. And I think that, you know, yes, he's the one that can do it.

MICHAELSON: Everything was just messaging there is about the economy. It's about making your life cheaper. No tax on tips and all the rest of that, it was not that impressive.

[01:10:03]

THOMAS: Well, I think the problem is most voters don't remember that because he's President Trump hasn't been on message. So the good news about paid ads is they're on message.

MICHAELSON: Well, yes, and they do know about the ballroom, though. He talks about that a lot. He talks about the war and other things as well. If you can believe it, the 2028 campaign seems like it's already started, including the governor of this state, surprisingly not in this state, but spending some time out of state. And we'll talk about what's happening with Gavin Newsom on the campaign trail and others when you guys join us a little later. John Thomas and Ian Calderon, we'll see in a little bit.

We want to get some other news right now. At least two people are dead after a mass shooting in downtown Minneapolis. Police add that the gunman also dead, likely from a self-inflicted gunshot wound. That incident left several people injured, including three police officers. One official says that police responded to reports of gunfire in a high rise building on Wednesday afternoon.

Inside, they encountered what's being described as haze, which limited their visibility before the officers were injured. One official says that police had gone to the same building earlier in the day after a dispute that may have been related to an eviction.

Venezuela's leader is praising President Trump after a series of new oil deals that she says could help pull her country out of its years- long economic crisis. Several major energy firms, including Chevron, are expanding projects to boost the country's oil output. Under the new agreements, Chevron says it plans to invest more than $7 billion in its Venezuelan oil projects and double production to about 600,000 barrels a day within five years.

All this is separate from a recent U.S.-Venezuela oil field pact that gives the U.S. access to 17 oil fields. The deals were signed in the presence of U.S. Energy Secretary Chris Wright and Venezuela's interim president, Delcy Rodriguez, who praised Chevron.

(BEGIN VIDEO CLIP)

DELCY RODRIGUEZ, ACTING VENEZUELAN PRESIDENT (through translator): We are making history with the signing of important agreements, an agreement in which Chevron, a company that has been in Venezuela for more than a century, is expanding its presence, investments and technology in our country. It also reflects the synergy between Venezuela's oil industry and Chevron, as well as a synergy between Venezuelan workers and Chevron.

(END VIDEO CLIP)

MICHAELSON: So the deals with Venezuela are not expected to have an immediate impact on oil or gas prices here in the U.S. They certainly could down the road and bring prices down, but not right away. And those higher gas prices are a part of why a lot of Americans disapprove of President Trump's handling of the economy. We just talked about this with John and Ian.

Finance ministers, meanwhile, and central bank governors from G20 countries are now in the United States discussing the global economy in North Carolina this week. And there is speculation that the U.S. Federal Reserve could raise interest rates later this month, which would not sit well with President Trump. We know he put the Fed chair in saying that you got to lower rates.

Treasury Secretary Scott Bessent is predicting better economic conditions ahead. But in the meantime, he's blaming a familiar foe.

(BEGIN VIDEO CLIP) SCOTT BESSENT, U.S. TREASURY SECRETARY: Look, prices are too high. The American consumer got blown away under Joe Biden, 21.5 percent stated inflation, probably much higher for working Americans. And we are going through an energy shock right now due to both the war in Ukraine and then the conflict in Iran. And the conflict in Iran, you know, will end and prices will come down. Overall, prices are coming down.

(END VIDEO CLIP)

MICHAELSON: In about two hours from now, Spain's prime minister is set to address parliament about the migrant crisis in Ceuta. He'll speak after a national day of protests was held Wednesday in solidarity with that Spanish oncline. In late July, tens of thousands of migrants stormed across the border from Morocco into Ceuta. Most of them later went home, but officials say thousands of them stayed in the city. And as Clarissa Ward reports, local residents have had enough.

CLARISSA WARD, CNN CHIEF INTERNATIONAL CORRESPONDENT: Thousands and thousands of people have taken to the streets of this relatively small city of Ceuta. Just 84,000 people actually live here. And so many of them are out tonight to demonstrate just how fed up they are with this crisis. You probably remember it was just over a month ago that more than 70,000 migrants came in from the border with Morocco. The majority of them returned to Morocco.

[01:15:01]

But the Spanish government says at least 5,000 migrants still remain. The local authorities here say the real number is actually 9,000, as many as 9,000 migrants, including more than 1,000 unaccompanied minors, which creates huge problems for a small community like this in terms of feeding them, housing them. A lot of these migrants are sleeping rough in makeshift shelters on the beaches. And people here, you can hear it.

They are saying enough is enough. You see over and over again the slogan, Ceuta is not for sale, Ceuta will defend itself. We want Spain and the government to take the initiative to bring this crisis to a rapid end.

MICHAELSON: Clarissa Ward in Ceuta there, thank you.

Rescue crews are racing against time after catastrophic flood along the Nepal-China border. Last week, officials say the death toll has claimed to climb to more than 1,200 in Nepal, with more than 4,200 people still missing, including 75 Americans. Across the border in China, at least 21 people are dead. Rescue crews are battling mud and debris as they try to reach workers feared trapped inside Nepal's hydropower tunnels.

Officials say around 900 workers are missing across projects along the river, though it's still unclear how many were actually inside the tunnels when the water and mud hit. The search is being slowed by bad weather, thick mud, damaged roads and destroyed bridges, making this already desperate rescue effort even harder. Still ahead on The Story Is, the judge in the Lindsay Clancy murder trial gives his final instructions as jurors remained deadlocked. We'll look at where the case could go from here if they can't reach a verdict. A leading jury consultant joins me live next.

Plus, Tiger Woods reaches a plea deal following his car crash in Florida earlier this year, why prosecutors say they could not prove the DUI allegations in court. That's next.

(COMMERCIAL BREAK)

[01:21:41]

MICHAELSON: The jury in the Lindsay Clancy murder trial will return on Thursday to continue deliberations after nearly 30 hours trying to reach a decision. Thirty-six-year-old Clancy, a former labor and delivery nurse, has pleaded not guilty to charges of murdering her three kids. Twice now, the jury has told the court that they cannot come to a unanimous verdict. On Wednesday, the judge gave his final instruction to keep the jurors working to try to reach a decision.

If the jury remains deadlocked, the judge may choose to declare a mistrial, which would end the trial without a clear resolution and raises the possibility of a retrial. Clancy's defense attorney spoke to the media about his client's reaction amid all these ongoing deliberations.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: How is she feeling today, leaving the court?

KEVIN REDDINGTON, CLANCY'S DEFENSE ATTORNEY: She's upset. I mean, she's sad. I just sit there and try to keep her up, you know, just try to talk and discuss different issues and things and just try to keep her mind occupied.

(END VIDEO CLIP)

MICHAELSON: Let's bring in Richard Gabriel. He is a trial consultant and has worked on high-profile cases, including O.J. Simpson, Phil Spector, Casey Anthony, and Aaron Hernandez. So he knows a thing or two about cameras. He joins me now live from here in Los Angeles. Welcome to The Story Is for the first time.

RICHARD GABRIEL, TRIAL CONSULTANT: Thanks, Elex.

MICHAELSON: So you have spent literally decades studying juries. And understand what are the dynamics within a jury room? Obviously, you're not in the room with this particular jury. But based off of everything you know about juries, what's most likely happening behind the scenes right now?

GABRIEL: Well, it looks obviously like they're pretty deeply divided. And this is an incredibly emotional case. So the divisions within the jurors can be significant. Some jurors may be feeling, look, I think she's really has planned this as a premeditated murder. I think she had clarity and volition at the time she committed the murders.

And therefore, they're stuck on the first-degree murder charge. I think other jurors really feel like, no, this is the Massachusetts definition of a mental disease and defect. But the real issue, and this is where the courts really have a problem and the justice system has a problem with really defining what criminality and mental illness is, is because they can find that she has a mental defect and disease.

And yet, if she knows about the criminality or the wrongness of her actions at the time she was killing the kids, they can still find her guilty. So there might be some real divisions in terms of how they see mental illness, how they see culpability and responsibility and accountability for what happened.

MICHAELSON: So how long can this process go? I mean, when's the likely time where the judge sort of pulls the plug and said, we've had enough?

GABRIEL: Well, it really depends on how many times they come back and say, no, seriously, we are deadlocked here. And partly that depends on how badly deadlocked they are. If it's one or two jurors, sometimes a compromise can be reached, maybe a murder two or a manslaughter charge, that can happen. But once you get to three or four jurors or even more, then the divisions really become significant. And it's very hard to break the deadlock at that point.

[01:25:02]

MICHAELSON: So if the jury were to come back to the judge again for a third time and say, seriously, we can't do this. Do you think that's it, third time's the charm?

GABRIEL: I think the judge would be really hard pressed. If they come back a third time, sometimes the court can inquire and go, well, what are you stuck on? How deeply divided are you? He can try to find that. If he finds that they may be close and there might be some room, he can send them back.

But for the most part, once they come back a third time and say, nope, everybody is stuck on their positions, he's more than likely going to call a mistrial on this. So I would imagine it could be the end of the day tomorrow. It could be Friday at the latest. I think we're going to get something in the works at least by the end of the week.

MICHAELSON: So if there's a mistrial, she's technically not convicted of anything, right? And then at least for the meantime, walks free. What happens then?

GABRIEL: So obviously she'll be free on bail. Then there's some real big decisions that have to be made. And partly it depends on the prosecutors and how they see their case. If they find, look, this hung basically, there was one holdout juror that just wouldn't budge. And most of them were for guilt. Then, boy, then they are going to sit there and probably retry the case.

If there's 12 for acquittal and one that's just stuck on guilt, they've got to take a good hard look and look and see whether they really want to try the case again or whether they want to try and attempt a plea bargain agreement with her and her attorney to try and come to some agreement about some institutional incarceration and come to a deal on that.

MICHAELSON: Something like, I'm guilty by reason of insanity, which is kind of already said. I killed the kids, but I'm not criminally responsible for it. And so I agree to some sort of mental treatment. But not conviction of murder. I mean, that would be a potential deal, right?

GABRIEL: It is a potential deal or even a murder charge where they say, I'm going to agree to this. But then the recommendation of prosecutors for the judge in terms of sentencing to basically lower the sentence and agree to supervised sort of sometime in incarceration, sometime in a mental institution.

I'm not quite sure whether Massachusetts allow that kind of leverage, but oftentimes the judges do have some opportunity, have some -- the ability to really strike a deal and say, look, we don't want to go through this again, even to go to another mistrial. It would be a significant cost and a lot on everybody, including the jurors.

MICHAELSON: Yes, it is a lot for those jurors. Richard Gabriel, trial consultant here in Los Angeles. Thanks so much for being with us. It'll be fascinating to see what happens in the hours ahead.

GABRIEL: Good to join you, Elex.

MICHAELSON: President Trump -- thank you -- is wishing Tiger Woods well after the golf superstar reached a plea deal stemming from a car crash in March.

(BEGIN VIDEO CLIP)

TRUMP: I know Tiger very well. He's a great guy. He's unique in so many ways, especially as an athlete, but also as a man. You know, he suffers great pain. He's going to have somebody drive him from now on.

(END VIDEO CLIP)

MICHAELSON: In court on Wednesday, prosecutors described what they called an erosion of evidence in the case. The 50-year-old golf superstar initially pleaded not guilty to a misdemeanor DUI charge, but investigators acknowledged that they could not prove that allegation in court. Instead, Woods and the state reached a plea deal with Woods pleading no contest to a reduced charge of willful, reckless driving. He will avoid jail time, but his driver's license will be suspended for five years and he'll have to pay a fine.

The National Basketball association has slapped the Los Angeles Clippers with huge penalties after an independent investigation revealed what they're calling a pattern of misconduct. The probe found Clippers improperly funneled off court endorsement deals to forward Kawhi Leonard through the team's corporate partners in exchange for team business to get around the salary cap. As a result, the league docked L.A. five consecutive first round draft picks starting in 2029, imposed a fine of 30 million bucks, and ordered five years of strict league monitoring.

Clippers owner Steve Ballmer has also been suspended for a year and there's penalties against the executives. The Clippers say the investigation was, "Heavily biased. They've rejected its findings and claimed to appeal." It's not clear, though, where they will appeal.

Next here on The Story Is, growing speculation over who will run for president in two years. Some heavy hitters appear to be testing the waters, including the governor of California on a Southern swing. We talk Gavin Newsom next.

[01:30:04]

And later, PG&E pulling back $2 billion in planned spending as the California lawmakers failed (ph) a recent agreement on wildfire liability. When we come back, how states and utilities are at odds over preparing for the rising cost of climate-driven disasters. Katie Porter here with us, live.

(COMMERCIAL BREAK)

MICHAELSON: THE STORY IS, can you believe it, the 2028 presidential race.

[01:34:45]

MICHAELSON: California Governor Gavin Newsom is currently on a tour of southern U.S. states. He spent the day in Alabama meeting largely with black leaders and black voters.

Newsom, of course, has said that he is considering a run for president in 2028, and the first Democratic primary state is South Carolina, where black voters are a key demographic.

Our panel is back. Democrat Ian Calderon, Republican John Thomas.

All right. Ian, as the Democrat here from California who's worked with Governor Gavin Newsom -- not very subtle in terms of what's happening. What do you make of the Gavin Newsom presidential run if it's happening?

IAN CALDERON (D), FORMER CALIFORNIA STATE ASSEMBLY MAJORITY LEADER: Gavin Newsom is one of the most skillful politicians in all of politics right now. He is absolutely a contender. He is somebody who's very charismatic, who's really smart.

He knows how to connect with people. People really tend to like him, you know. And he's got a presence, when he walks into a room, you feel it. And it's very captivating.

And so he is absolutely a contender and somebody who's going to be very, very strong in this upcoming race.

MICHAELSON: How do you see Gavin Newsom from the Republican side? JOHN THOMAS, REPUBLICAN STRATEGIST: I mean, I don't disagree with Ian,

that the Democrats -- that he's a contender. I just -- there are some warning flags.

First, is he peaking too soon? You know, the guys trying to stay relevant and he does all these stunts and tricks. But, you know, usually the first thing we're talking about early in a presidential contest is not the person that actually wins the nomination.

The other is, look, there have been some chinks in the armor here. Governor Newsom said he'd stop the wealth tax. It's on the ballot. It might cause major capital flight from the state.

There's a lot of problems with California that the rest of the country views. And some of these early tours haven't been exactly flawless.

So look, he's going through the motions. I think Gavin's biggest flaw is that he's kind of whatever he needs to be in the moment to stay relevant.

And in a -- if the DSA is the purity test where the intensity is in a Democratic primary, I'm not sure that they're going to like somebody who's changed his positions.

MICHAELSON: If that's -- if that becomes the thing.

THOMAS: If it is the thing, yes.

MICHAELSON: And we'll see. If it is just a purity test of who is the closest to staying to a left position on through and through, there's no way Gavin Newsom wins that.

Alexandria Ocasio-Cortez could probably win that. She's considered a potential contender. How do you see her?

CALDERON: She is representative of this next generation of leadership that's just ready to explode. She has a huge followings. People really like her. She aligns herself with DSA, but also doesn't take on every single facet and every single policy position that they espouse.

You know, she's been able to walk that line. And what's interesting is, as you've seen her in this run up to potentially becoming a candidate, she has not been as vocal on certain issues or taking positions and endorsements that she normally would -- you would --

(CROSSTALKING)

MICHAELSON: And she laughed at the idea of Woke 1.0 to try to distance herself from Woke 1.0, which she was the leader of in a lot of ways.

Jon Ossoff also getting a lot of attention, kind of a different perspective as another millennial candidate. Do you think he's got the juice?

THOMAS: I do, I think he's an incredibly impressive and skilled candidate. I guess the question is, where is the heart and soul and intensity of the Democratic Party going to be?

Is it going to be with a more moderate candidate who kind of reminds me a little bit of Barack Obama and his soaring rhetoric? Or is it going to be on the further left with an AOC who I think the most powerful thing about her is I believe she believes what she says. And being that level of authentic is rare in today's politics.

MICHAELSON: Yes. And meanwhile, talk about what's happening on the Republican side. It's interesting. You got the president and then it feels like an episode of "Succession" that all of his, you know, sort of metaphorical sons are all potentially battling for each other.

JD Vance, the vice president of the United States, Marco Rubio, the secretary of state. We've heard about them for a while.

Recently, there's been more of a conversation about Pete Hegseth, the Secretary of War.

THOMAS: I think -- I think Pete's name being bandied around. I don't know how serious that is yet. Pete would be a contender. If nothing else, he's the dominant Secretary of War, former Fox News host. The base knows him and still likes him.

MICHAELSON: And yet the most unpopular thing that President Trump is doing right now is the war with Iran. And he's the face of that.

THOMAS: And I think his -- whether he lives or dies in a presidential contest, is going to be determined by how the Republicans view that conflict at the end of the day.

The race between Rubio and JD, it's really hard to tell. Rubio is an incredibly skilled politician. But I think it's going to come down to what does President Trump do?

And my hunch on the matter is, if he loses in the midterms, he's going to look back and say, my legacy is foreign policy. And Marco's just been there leading the charge on that.

MICHAELSON: You think he elbows out his own vice president and says, Marco's the guy?

THOMAS: I do.

MICHAELSON: Do you think that's what ends up happening? Who is the hardest Republican to run against from a Democratic perspective?

[01:39:47]

CALDERON: I think JD Vance is really good, and I think he brings a lot of youth, a lot of energy. And I think he's somebody -- the biggest issue is you've got Trump. What is Trump going to do?

But then also just this vacuum -- this, you know, who fills in the vacuum of Donald Trump when he leaves?

So I think -- I think Vance is strong. I don't know about Rubio. I thought that there was a lot more energy when he ran the last time. But it's hard to say.

MICHAELSON: Doesn't polling indicate that Marco would be the toughest?

THOMAS: I think so. I mean, he can put together a broad coalition the Republicans need. He's thought to be competent. He -- the donor class likes him. The grassroots likes him.

MICHAELSON: The question is -- and it would be interesting if AOC ended up being the candidate, would moderate Democrats maybe feel comfortable with a Marco Rubio --

THOMAS: Possible.

MICHAELSON: -- where they probably wouldn't with a Pete Hegseth --

THOMAS: Right.

MICHAELSON: -- or maybe a JD Vance. Who knows? And interesting that JD Vance has staked his spot as potentially against the war. That may help him down the road.

Thank you, gentlemen, both so much. We really appreciate it. John Thomas, Ian Calderon -- both of them joining us.

When we come back here on the issue is our viewers are -- on THE STORY IS, our viewers around the world, "WORLD SPORT" is next.

For our viewers in North America, I'll be right back with an interesting story about Pacific Gas and Electric, and this fight over utilities around the country.

What happens when we have all these big fires, when we have all these big episodes? And what does it mean for you, who maybe have to pay for your power?

Katie Porter joins us live when we come back here in North America on THE STORY IS.

Thanks so much for being with us. Stay there.

[01:41:24]

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MICHAELSON: Welcome back to THE STORY IS.

California-based power company Pacific Gas and Electric has been pushing state lawmakers to pass a bill to reduce its liability for wildfires. The legislature this week failed to reach an agreement, and as a result, PG&E CEO Patti Poppe has announced that the company is scaling back $2 billion in infrastructure investments over the coming year.

Here's what she posted on LinkedIn.

(BEGIN VIDEO CLIP) PATTI POPPE, CEO, PACIFIC GAS AND ELECTRIC: We're reducing the pace of capital spending in 2027 as a short-term step While this review is underway. We will do this so that we borrow less money and avoid some of the more expensive interest rates, which would drive up customer costs.

Let me be clear we will not sacrifice safety when choosing what work to delay or defer.

(END VIDEO CLIP)

MICHAELSON: Joining me now live is former Democratic Congresswoman Katie Porter, who is now a law professor at UC Irvine. Congressmember, welcome back to THE STORY IS.

I know you are fired up about this particular issue. And you don't see this just as a California issue, but really a national issue and really a worldwide issue. How is this sort of a bigger issue for the rest of the country?

KATIE PORTER, FORMER DEMOCRATIC CONGRESSWOMAN: Yes. So look, climate change is producing more disasters and these disasters are getting more expensive.

And so this is a huge looming political issue and one that most politicians are not very facile with. Governor Newsom is an exception because we've had a lot of wildfires, they really shaped him as governor.

But I think this really begs the question, who should pay when there's a wildfire? And what you saw PG&E say today is, I've never seen a corporation do this direct to camera like the CEO did there. She said basically, the legislature in California here didn't give us what we wanted, so we as a corporation are going to hold out. We're going to -- we're going to make the rest of you suffer.

And so I think that really shows the question is, when climate change happens, who ends up holding the bag? Who ends up paying? Whose job is it to fix that?

And what she basically said today is the legislature -- didn't get what I wanted from the legislature, now you all in California are going to lose out.

MICHAELSON: Well, and in some ways, she may be calling the bluff of the legislature as well, because this puts the Democrats in a tough place, especially in a state like California, where they have a supermajority. How do you see the box that the Democrats are in on this?

PORTER: I actually think both parties are kind of in a box here, which is that we were seeing this populist surge. People want costs to go down. We hear Democrats and Republicans saying, things cost too much. We're going to lower costs.

You've heard a lot of politicians say that. I'm going to lower costs. But when you ask them how, they really don't have much of an answer.

And so here's PG&E, which has had record profits in 2023, 2024, broke another record and -- what they're basically saying today is we want a better deal. We don't want to be held responsible when we start a wildfire. We just want to pay less when we're the source of that fire.

And so the question is, why would anyone today, when there's so much populist anger at monopolies, there's so much anger at corporations. And we've seen Republicans sometimes actually come back and hold big companies to account, just like we've seen Democrats do it.

But this is a big issue we have to figure out. Are you willing to stand up to corporate America, or are you as a party or as a politician chasing that corporate cash?

MICHAELSON: And an interesting challenge for Governor Newsom, not only as the governor now, but as somebody who's potentially running for president, has to talk about this issue around the whole country.

How do we think about this broader issue? Because clearly, if you look at this summer, there's something going on that a lot of people think is climate change. We see flooding, we see heat waves, we see fires -- we see all sorts of problems all over the world that seem to be getting worse.

And then the question is, who's responsible for dealing with that especially when it comes to insurance and power?

PORTER: Yes. So I mean, look at the most fundamental level, it's the government because it's the government's job to help keep us safe. There's nothing more important that a government can do.

And so when we have flooding, when we have fires, hurricanes -- all these weather events, the government is going to be the one that's going to have to stand there at the disaster and try to fix it.

But then that raises the secondary question, which is, where are you going to look to recoup that money that you're having to pay? And so I think the answer here is fossil fuel companies.

[01:49:48]

PORTER: What we saw with this back and forth between PG&E and the legislature and insurers, we're going to see the same thing with fossil fuel companies on climate change. We're going to see the same thing with manufacturing.

So I think we're just going to have to really ask ourselves, like, who ends up holding the bag? And is it really going to be consumers in higher costs over and over and over and over again?

MICHAELSON: And for the short term, at least here in California, it sounds like the people who are going to be holding the bag are ratepayers -- every day Americans.

PORTER: Well, I would say even worse than ratepayers, because remember, not everybody has a -- you're -- not everyone's a PG&E customer.

MICHAELSON: Yes.

PORTER: Not even in California. But what everybody is across the country, wherever you live across the world, if California doesn't have enough energy, that is a big problem for our entire economy, the economy of the world.

And what Patti Poppe said today, the CEO of PG&E said today, is we're not going to build the energy infrastructure that California needs.

And I don't know about you, but when I flip that switch, I expect the lights to come on. And I think that is really --

MICHAELSON: Yes.

PORTER: -- calling the bluff of the legislature.

And so this kind of comes down to, I think, voters, who are you going to hold accountable? Are you going to say corporate America, this is your fault, you're getting too greedy? Or are you going to say to politicians, you all should have seen this coming. You should have gotten this fixed a long time ago.

MICHAELSON: Katie Porter, thanks for coming in and sharing your views.

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

[01:51:10]

(COMMERCIAL BREAK)

MICHAELSON: Here's a look at some of the stories we'll be following throughout the day ahead.

The jurors are set to return Thursday for a sixth day of deliberations in the Lindsay Clancy murder trial. The judge on Wednesday gave jurors his final instruction to try to reach a verdict after they again told the court they could not reach a unanimous decision.

Clancy, a 36-year-old former labor and delivery nurse, has pleaded not guilty to murdering her three children.

The remnants of Tropical Storm Edouard have already swamped parts of east Texas. Now, parts of the state are facing a rare high risk for flooding, with more rain expected into Thursday.

More than 7 million people in eastern Texas are under a flood watch.

Thanks so much for watching THE STORY IS. Really appreciate you being with us.

The news continues right here on CNN after a break. And I'll see you back here tomorrow.

[01:56:19] (COMMERCIAL BREAK)