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Caroline Kennedy Accuses Cousin RFK Jr Of Being A "Predator" And Urges Senators To Reject His Nomination As HHS Secy; Patel's Personal Battles With Intel Community Shaped His Views Of FBI; WH: NJ Drones That Caused Hysteria Were "Not The Enemy"; Trump Calls China's DeepSeek A "Wake-Up Call" For U.S. Industries; Beauty Company Embraces DEI As Other Brands Ditch Programs. Aired 2:30-3p ET

Aired January 28, 2025 - 14:30   ET

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

[14:30:00]

ARLETTE SAENZ, CNN WHITE HOUSE CORRESPONDENT: The video is likely not just potentially an effort to try to get Republicans to vote no. But also make sure that Democrats stand united in opposition to Kennedy when he eventually comes up for a vote in the Senate.

Now this video is coming on the eve of the first confirmation hearing for Kennedy. He will appear before the Senate Finance Committee tomorrow. And then a second hearing on Thursday before the committee that deals with health issues.

And Kennedy is one of President Trump's most-vulnerable nominees at this time, at a moment when every vote will count up here on Capitol Hill, Republicans and Democrats alike if Trump is hoping to get him across the finish line.

BRIANNA KEILAR, CNN HOST: That is some detail that was included in there.

Arlette Saenz, live for us on Capitol Hill, thank you.

Boris?

BORIS SANCHEZ, CNN HOST: We're learning new details about President Trump's pick to lead the FBI, Kash Patel, and the battles that he's waged over the years with U.S. intelligence agencies.

On Thursday, Patel will be on Capitol Hill for what could be a contentious public confirmation hearing. Perhaps more than any other nominee in recent memory, Patel's battles with the FBI, the very agency that he's poised to run, have defined his rise to political prominence.

He frequently rails against a litany of alleged abuses by intelligence agencies and the FBI, from the Russia investigation to the FBI seizure of classified documents from Trump's Mar-a-Lago residence.

CNN's Zachary Cohen is here with the details.

And, Zach, you have some new reporting on what's driving some of the distrust between Kash Patel and the intelligence community. Tell us more.

ZACHARY COHEN, CNN NATIONAL SECURITY REPORTER: Yes, Boris, it's clear that the distrust between Kash Patel and the intelligence community really cuts both ways.

And a lot of this centers around Patel's efforts during the first Trump administration to declassify and release documents related to the FBIs investigation into connections between Russia and Donald Trump's 2016 campaign -- or 2016 campaign, an investigation that Patel believes was driven by the so-called Deep State.

Now, our reporting shows that this came to a head in 2020 at the end of Trump's first term, when the CIA referred Patel to the Justice Department for a Criminal Investigation.

Details of this referral have not been previously reported, but we are learning from our sources that the CIA asked DOJ to investigate whether Patel shared classified information about the Russia probe with people inside the government who lacked the proper level of security clearance to see it.

Now, it's important to note that Patel has never been charged criminally by either Trump's or Biden's DOJ, and there's no indication that national security prosecutors at DOJ took steps to escalate the referral beyond an initial review. Patel also denies that he ever mishandled classified information.

But also, we're learning that intelligence officials placed what is known as a red flag on Patel's security clearance file to document their broader concerns about his handling of classified information during Trump's first term.

We have a statement from Patel's spokesperson saying, quote, "The leaking of years-old bogus referrals is evidence our government is in desperate need of reform. It's ironic that the same people who tried to stir up the phony narrative that Kash would abuse power are the very ones abusing power to attempt to damage Kash."

SANCHEZ: And, Zach, as you point out, there's a history here. And it's more than just about Donald Trump. So what is it that's driving this?

COHEN: There's been a few that's been percolating for years now. Patel has accused the FBI and the intelligence community of carrying out a, quote, "Deep State plot" not only against Trump, but his allies, including himself.

Patel points to the fact that he had his communications seized by the government as part of a separate investigation that was hunting for leaks.

He was also -- he was among dozens of congressional staff targeted in that, a dragnet that came under criticism from the Justice Department inspector general. He even sued Trump-era officials, including former FBI Director Chris Wray, the man he would replace if he's confirmed.

So for -- in this lawsuit over obtaining his communications without his knowledge.

So look, Patel has also suggested that the FBI should curtail its intelligence responsibilities and instead focus on law enforcement, which would have basically amount to rolling back reforms made after the 9/11 attacks. It was intended to facilitate better cooperation between the bureau and other U.S. intelligence agencies.

This will all come up for sure on Thursday when Patel has his confirmation hearing.

SANCHEZ: One of several confirmation hearings that we will be watching closely.

Zach Cohen, thanks so much for the reporting. Appreciate it.

[14:33:58]

Still to come on CNN NEWS CENTRAL, the White House solving the mystery that's been on the minds of so many in New Jersey and across the country for weeks. What the new press secretary just said about all those drone sightings and who was behind them. The truth is out there.

(COMMERCIAL BREAK)

[14:38:50]

KEILAR: Just moments ago, at the White House, at the briefing, the Trump administration revealing that those mysterious drones spotted over New Jersey and the Tri-State area back in December, which caused a whole lot of panic, were, quote, "not the enemy."

SANCHEZ: In fact, the White House now says many of them were actually cleared for takeoff.

Listen to this. Right off the top of the briefing.

(BEGIN VIDEO CLIP)

KAROLINE LEAVITT, WHITE HOUSE PRESS SECRETARY: After research and study, the drones that were flying over New Jersey in large numbers were authorized to be flown by the FAA for research and various other reasons.

(END VIDEO CLIP)

SANCHEZ: CNN aviation correspondent, Pete Muntean, joins us now.

And I got to say, Pete, you we're dead on about this. You said that a lot of this was just confusion. Do you think Trump might have been listening?

PETE MUNTEAN, CNN AVIATION CORRESPONDENT: You know, this is really interesting because this is kind of the most significant explanation we have had about this drone hysteria.

And remember, I went to New Jersey to report on this at its peak. But really begs the question about whether or not the White House today is trying to make news on this when they're taking a lot of heat for this federal funding freeze.

Remember that drone hysteria really took off back in November, hit its stride in December, and that's when the Biden administration explained that these purported drone sightings were not nefarious.

[14:40:01]

And beyond that, top officials insisted that many reported sightings were cases of mistaken identity. In fact, many of the videos that were posted on social media were of normal commercial airline flights on their way into places, like the Newark Airport.

Trump was president-elect back then, and he really fanned the flames of speculation that was taking off on some of the big podcasts.

And I want you to listen now to what he said at Mar-a-Lago back on December 16th.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Something strange is going on. For some reason, they don't want to tell the people.

(END VIDEO CLIP)

MUNTEAN: So this new explanation really flies in the face of what Trump said five weeks ago.

And Press Secretary Karoline Leavitt said she was speaking on behalf of the president when she said that these drones are not the enemy.

Remember, one of the big conspiracy theories that was taking hold at the time was that drones we're being launched off an Iranian ship off the New Jersey coast.

Leavitt said that the drones that sparked interest initially were flying legally, and then hobbyists got in on the action and started to make people more nervous.

Even still, though, the Federal Aviation Administration responded in a big way. It put up dozens of drone bans over critical infrastructure sites in New Jersey and New York like nuclear power plants.

But to prove that the government is no longer worried about drones, and that much of this was hysteria, all those temporary bans have now been lifted.

There is one left. And it may not surprise you. The last drone ban still in the big, long list is over Trump's golf course in Bedminster, New Jersey.

KEILAR: A-ha.

SANCHEZ: Of course. KEILAR: So you're saying we already knew this thing that we learned

today?

MUNTEAN: We essentially knew this.

KEILAR: And we learned it again.

MUNTEAN: From the outset. You know, I said this may be something that was a little bit both, and that this could have been people sort of sparking interest with legitimate drone sightings.

But then people sort of got confused and started to see airplanes and helicopters that were doing their own normal thing.

I'm pretty sure that video right there is actually of a flight going into Newark.

(LAUGHTER)

MUNTEAN: So that really confused people and -- and people started to look up.

I went to Seaside Heights, New Jersey, the home of the "Jersey Shore" television show, where they -- the Ocean County Sheriff's Department has a really, really advanced drone sighting department.

And officers who were responding to calls all the time, they were not only getting calls for airplanes and helicopters and training flights and military helicopters in the area, but also things where people would see things like Jupiter, which can be very, very bright on a clear night.

And so it's really interesting that a lot of these drone sightings kind of went away when things we're cloudy and people essentially stopped seeing these. So -- what they thought were drones.

So this is a sort of a re-explanation of something we already knew.

KEILAR: Yes. Then it's only Snooki sightings and the situation sightings.

MUNTEAN: I didn't buy my Snooki shirt at the Snooki store.

KEILAR: Well, you should have.

MUNTEAN: Sorry.

KEILAR: And get me one next time.

(LAUGHTER)

KEILAR: Pete Muntean, thank you very much. Appreciate it.

(CROSSTALK)

SANCHEZ: The gym-tan laundry correspondent. (LAUGHTER)

KEILAR: Yes. GTL Peter Muntean.

All right, so some of America's biggest companies are rolling back their DEI initiatives, but a popular cosmetics brand is standing firm.

Plus, it was the A.I. shot heard round the world. How China's DeepSeek revelation could upend American dominance in artificial intelligence.

(COMMERCIAL BREAK)

[14:47:49]

KEILAR: The financial markets appear to be leveling off today after Chinese A.I. startup, DeepSeek, sent shockwaves through Wall Street and the tech world on Monday.

Chip maker, Nvidia, is up slightly today after losing nearly $600 billion in market value following the surprise announcement that DeepSeek A.I. model can compete with us A.I. systems at just a fraction of the cost.

It's a stunning development that even got the attention of President Trump.

(BEGIN VIDEO CLIP)

TRUMP: I've been reading about China and some of the companies in China, one in particular, coming up with a faster method of A.I. and much less expensive method.

And that's good because you don't have to spend as much money. I view that as a positive.

The release of DeepSeek A.I. from a Chinese company should be a wake- up call for our industries that we need to be laser focused on competing to win because we have the greatest scientists in the world.

(END VIDEO CLIP)

KEILAR: We're joined now by Sara Fischer, a CNN media analyst, and a media correspondent for Axios.

All right, Sara, what's the wake-up call here for the U.S. when it comes to dominance of this critical emerging technology?

SARA FISCHER, CNN MEDIA ANALYST: Brianna, our Big Tech giants have spent so many billions of dollars trying to gain a foothold in the A.I. industry.

And the fact that our biggest economic and national security rival in China has been able to put forward a rival A.I. model for a tiny fraction of the cost that our tech giants have put together is absolutely stunning. And just to give you a sense of that scale, this new DeepSeek A.I.

model was built with around $6 million of budget. That is nothing when you consider the fact that OpenAI just raised $6 billion of venture capital for its latest round.

It's a huge wake-up call for the way that we have been thinking about our dominance in A.I.

KEILAR: Trump called this a positive development. If it's proven that this new A.I. technology can be created at a cheaper cost, would that savings benefit companies that, you know, want to use it? Does that something that would help their bottom line?

[14:49:59]

FISCHER: Two things. One, yes, it could reduce the costs of everyone in the cottage industry around these big, large language models that are trying to build functions for companies to use.

But then the other thing is this is an open-source model, Brianna. So that means that any engineer or developer can build on top of it. That's supposed to spur innovation.

When you think about the big U.S. tech giants that are investing in A.I., most of them are not open sourced. They are closed models, which means that you don't get access to the different tools and models that are within them unless you pay.

The only open-source model in the U.S. that's big right now is the one that's owned by Meta. And I think that's why you saw Meta's stock take a beating last week.

But big picture here, Brianna, when it comes to our economy, so much of the S&P 500 has been backed by the frothiness of the A.I. market. To see a competitor come in and do it at a fraction of the cost, that's what took out all the value from the market last week.

And it's what I would expect to be a continued question when investors are looking to see whether or not they should invest the same way in A.I. in the United States.

KEILAR: So TikTok, which is so dominant in the social media sphere, is, of course, facing this ban over ties to China. Could that happen with DeepSeek in the A.I. sphere? And what would that mean for Americans?

FISCHER: Well, interestingly, right now, we have export controls over the number-one thing that DeepSeek needs, which is Nvidia chips. So even if we weren't to ban it, we could definitely sort of, you know, hold them back by reducing their access to our chips.

But even if we we're to ban it, Brianna, I think one thing you're noticing with the TikTok ban is that if consumers like it, they're going to fight for it.

We saw that DeepSeek was the number-one most downloaded app in the U.S. for the past two days. So let's say we we're to try to ban it, I would expect a considerable amount of uproar from consumers who like this technology, who say it's just as effective as other apps that they're using.

And remember, also, it's free. That's a difference when it comes to some of these other apps like ChatGPT that are starting to charge consumers subscriptions.

KEILAR: How do you see this? Is this like the new arms race?

FISCHER: It is an arms race. I mean, we think about our national security in terms of our ability to sort of, you know, level up against China with technology.

We thought for so long, Brianna, that we had the advantage. When you think about it, from a cybersecurity perspective, a few months ago, the Big Salt Typhoon hack caught us completely off guard. Now, with A.I., DeepSeek is catching us completely off guard.

So there's an arms race for technology, but not just from a business and economics perspective, but really to ensure that our nations are dominant against probably our biggest adversary.

And I think that if DeepSeek is just going to be one of many advances that China comes at us, that is going to not just rock consumers, but also our markets and businesses.

You know, we saw this with TikTok. We saw this with Shein and Temu in retail. Now we're seeing this with A.I. I mean, it's not going to end there.

KEILAR: All right. Sara Fischer, thank you so much for that. We appreciate it.

Boris?

SANCHEZ: Big brands like Amazon, Target, Walmart and McDonalds have recently changed or ended their Diversity, Equity and Inclusion programs altogether, known as DEI, of course.

E.l.f. Beauty, a popular cosmetics brand with Gen Z and Millennials, is a rare company embracing and vocally touting its diversity efforts.

CNN consumer reporter, Nathaniel Meyersohn, joins us now.

Nathaniel, you actually spoke with e.l.f.'s CEO about this. What did they share with you?

NATHANIEL MEYERSOHN, CNN CONSUMER REPORTER: Yes, Boris, you know, e.l.f. is standing behind DEI right now. Because it thinks that it's good for business.

You take a look at e.l.f.'s customers and it's employee base, this is a very diverse company. You know, about 75 percent of e.l.f.'s employees are women, 40 percent are people of color. And the e.l.f. CEO, Tarang Amin, he told me that the DEI efforts were

helpful to e.l.f. for recruiting and hiring and talent retention, and to appeal to its younger and more diverse customer base.

SANCHEZ: Nathaniel, are they anticipating any potential backlash?

MEYERSOHN: Right, Boris, there is a ton of pressure right now on companies across America, around DEI. You have President Trump trying to crack down on it. You have activists like Robby Starbuck that have targeted companies really trying to get them to pull back.

But Amin told me that he thinks that some of this backlash is overblown, that there are more people who are committed to diversity and committed to inclusion.

And that even some of the companies that are pulling back, like Amazon and Walmart, that some of these changes are a little bit more performative. They're not as kind of substantive. They're really just making changes to try to get the heat off.

And he also noted that there are companies that are standing up for DEI right now, Apple, Costco, JPMorgan.

You know, just the other day, Costco's shareholders, they rejected a shareholder proposal trying to get Costco to -- to move away from DEI. And Costco said that DEI, like e.l.f., was good for its business.

[14:55:11]

SANCHEZ: Really fascinating reporting.

Nathaniel Meyersohn, thank you so much.

When we come back, the shocking freeze on federal loans and grants could have a massive impact nationwide. We're going to dig into what it means for you in just moments.

(COMMERCIAL BREAK)

[15:00:04]

ANNOUNCER: This is CNN breaking news.

KEILAR: We do begin with breaking news. The fallout from the federal aid freeze.