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Musk Takes Center Stage at Trump's First Cabinet Meeting; Israel, Hamas Agree on New Exchange as Fragile Ceasefire Appears Intact; Crowds Line Streets to Mourn Bibas Family Who Were Killed in Gaza. Aired 2-2:30p ET

Aired February 26, 2025 - 14:00   ET

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

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[14:00:44]

BORIS SANCHEZ, CNN HOST: President Donald Trump loves to put on a show. And the headliner at his first cabinet meeting was Elon Musk touting DOGE's sweeping cuts and mass firings. As President Trump warns workers who don't respond to that billionaire's, what did you do last week? Email saying they are now, quote, on the bubble.

And the White House facing backlash after the President posts a bizarre AI Video of a reimagined Gaza depicting the war torn region as a vacation destination, complete with a golden statue of Trump and a sunbathing Benjamin Netanyahu.

JESSICA DEAN, CNN HOST: And the Supreme Court hears a key DEI case, why an Ohio woman believes she was the victim of what she calls reverse discrimination at her job. We're following these major developing stories and many more all coming in right here to CNN News Central.

SANCHEZ: Elon Musk takes center stage as President Donald Trump assembled his cabinet for their first meeting of his second term. Today, the tech billionaire stood before agency leaders, solidifying his power and influence in the new administration, even though some of his moves are ruffling feathers among top officials.

For weeks now, Musk and the government efficiency team have essentially chainsawed their way through the federal government, gutting its workforce, attempting to take over systems containing sensitive information and now threatening employees with their jobs if they don't respond to an email. But the President praised his special government employee, who, by the way, is not an official part of the cabinet or even an elected official. And he defended the mass firings we've seen carried out by Musk and DOGE.

Let's take you now live to the White House with CNN's Jeff Zeleny. Jeff, talk to us about the dynamic in the room between Trump and Musk and the cabinet secretaries.

JEFF ZELENY, CNN CHIEF NATIONAL AFFAIRS CORRESPONDENT: Well, Boris, in that ornate cabinet room in the west wing of the White House, the world's richest man held court in a black T-shirt and a black Make America Great Again hat, clearly being invited by the President to make his case for how he believes the federal workforce should be reshapen and shrunken.

And this is something that of course, has been going on for the first four weeks of this administration. But we have not seen this dynamic before as virtually every member of the Cabinet, most confirmed by the Senate, a few awaiting votes of their own, were largely sitting in silence as they were watching Elon Musk talk about what he is doing and would like to do to their own agencies.

Now, he said that email that was sent out last weekend that caused so much consternation, what did you do last week? Was meant as a pulse check, not a performance review. Again, advancing the argument and the question without evidence, that there are many people on the federal payroll who don't actually exist or who are defrauding the government. But the President also made clear there is little room for dissent in his Cabinet. He said he hears some of the concern, but then jokingly said, don't air it. Let's watch.

(BEGIN VIDEO CLIP)

MAN 1: (Inaudible). If you are well (ph) throw him out of here.

DONALD TRUMP, 45TH & 47TH U.S. PRESIDENT: I have a lot of respect for Elon and that he's doing this and some disagree a little bit. But I will tell you, for the most part, I think everyone's not only happy, they're thrilled.

(END VIDEO CLIP)

ZELENY: Not only happy, they're thrilled. That actually wasn't the case over the weekend when many of these agency and department heads advised their employees to ignore these emails from the Office of Personnel Management, which Elon Musk is heading as his part of his role as a senior adviser of the Department of Government Efficiency

But never mind all that. It was the power dynamic that was on display in the room. One of these Cabinet meetings, they usually are not broadcast live, but the White House made that decision and it was something truly showing that Elon Musk is perhaps does not have a seat at the table, but he is center stage in this administration. There is no question about it.

And besides all of that, there was some other news made, of course. The President said that the Ukrainian President, Volodymyr Zelenskyy, will be visiting the White House on Friday, one step closer to a potential peace deal, perhaps.

[14:05:03]

And he also talked about his desire for the budget. He said Medicare, Social Security will not be cut. Actually, just a few moments ago, Speaker Johnson walked into the White House to have more discussions about the legislative agenda. So a lot going on here, but that power dynamic certainly leads today. Boris? SANCHEZ: Now, we'll wait for details on that meeting with Speaker Johnson. Jeff Zeleny live for us at the White House, thank you so much.

Meantime, Donald Trump directly addressed what would happen to federal workers who didn't respond to Musk's email ultimatum. Let's listen.

(BEGIN VIDEO CLIP)

TRUMP: I'd like to add that those million people that haven't responded though, Elon, they are on the bubble. You know, I wouldn't say that we're thrilled about it. You know, they haven't responded. Now, maybe they don't exist. Maybe we're paying people that don't exist. Don't forget we just got here. This group just got here. But those people are on the bubble, as they say. Maybe they're going to be gone.

(END VIDEO CLIP)

SANCHEZ: CNN's Rene Marsh has been covering the fallout from this email. Rene, the President essentially saying that federal workers who don't respond by Monday night might be at risk of losing their jobs.

RENE MARSH, CNN CORRESPONDENT: Right. Certainly sounds like he's suggesting that those folks could be penalized for not responding to Musk's email. And the President also with that statement is making clear his support for Elon Musk and all the actions that both Musk and DOGE have taken so far.

But this email has also really highlighted the tug of war power struggle between Trump appointed Cabinet officials and the unelected Elon Musk because we saw, as Jeff noted, several Cabinet secretaries tell their employees not to comply with Musk's email request. So it was interesting to see Musk taking center stage at this Cabinet meeting today where he appeared even at times almost lecturing the Cabinet secretaries about the need to move fast to make cuts to government spending.

At one point, Musk was asked how many federal employees he was looking to cut and he didn't give an overall number, but he did say he wanted to cut all jobs that were, quote, not essential. And the President said that the administration was going to start firing federal employees more quickly. Take a listen to that moment.

(BEGIN VIDEO CLIP)

TRUMP: I spoke with Lee Zeldin and he thinks he's going to be cutting 65 or so percent of the people from environmental and we're going to speed up the process, too. At the same time, a lot of people that weren't doing their job, they were just obstructionists and a lot of people that didn't exist.

(END VIDEO CLIP)

MARSH: Well, we have seen that many of these federal agencies have listed poor work performance as the cause for terminating many of these federal employees. But CNN has found that of these employees actually had perfect performance reviews and were still fired. But again, the President here is just previewing what is on the horizon.

Boris, we know that federal agencies right now are creating reduction in force plans and reorganization plans as we speak. And that work should be complete in another two weeks from now. So the bottom line is we will be seeing a lot more firings.

SANCHEZ: Rene it's really stunning, not only the role that Musk has played in these firings, but also at today's meeting considering the government contracts that his private business has.

MARSH: It was, and I think that also was something that we just really can't state enough. I mean, there is this blurring of the lines of, you know, private industry and private interest with the work of the federal government, which is supposed to be carried out independent of all of that.

And as you mentioned, Musk has lots of contracts with a variety of government agencies where the Cabinet secretaries were in the room there today. And also let's not forget that a lot of his companies fall under the oversight, the regulatory oversight of a lot of these agencies where the Cabinet secretaries were today.

And so I'll leave you with this question. I mean, after an endorsement like what we saw from President Trump for Elon Musk, which one of those cabinet secretaries is going to allow their agency to launch an investigation into Elon Musk? His businesses slap him with a violation for any regulatory violations? I mean, who is going to have the gall to do that after seeing so much support from President Trump on display here at this Cabinet meeting? Boris?

SANCHEZ: Yeah, an important question to keep in mind. Rene Marsh, thank you so much. Jessica?

DEAN: Many questions remain over House Republicans budget blueprint which calls for as much as $2 trillion in spending cuts. A lot of Americans out there now worried that these drastic cuts could severely impact the type of aid that they depend on from the government. And joining us now, Republican Congressman Marlin Stutzman of Indiana. Congressman, thanks so much for being here with us.

[14:10:00]

We appreciate it.

REP. MARLIN STUTZMAN, (R) BUDGET COMMITTEE MEMBER: Thanks, Jessica. Great to be with you this afternoon.

DEAN: I want to start first with a lot -- there are a lot of questions. Admittedly, this is a blueprint. Now, the Senate's going to have to figure out what they want to do. My colleague spoke with Republican Senator Josh Hawley, who said that any potential cuts to Medicaid would be an absolute nonstarter for him because, in his words, he doesn't want to punish working people. Are you supportive of any cuts to Medicaid? STUTZMAN: Well, first of all, you know, Medicaid is a very important program for my district. And, you know, I come from a strong Republican district in northeast Indiana, and I know that a lot of businesses, a lot of my constituents have been put in a very difficult place to pay for their healthcare costs. And Medicaid is one of those options that many people turn to. You know, whether it's a Medicare type program or Medicaid, we know that healthcare costs have just -- are out of control and are skyrocketing.

And I think what's really important here as people talk about all of these programs, whether it's, you know, what the DOGE team is doing at the White House, what President Trump is asking for, is that we look at every facet of government to make sure that there's no waste, fraud and abuse.

And I'll tell you, we know in the Medicaid program there are professional fraudsters out there. There's a lady in Connecticut that was just charged with taking over $1.5 million out of the Medicaid program. That's money that could have been given to a single mother in my district to help her make sure she covers her health care costs. So there's a lot of work that can be done on all spectrums of government spending.

DEAN: And I hear you on that. I just want to clarify, you would or would not be okay with any cuts to that program?

STUTZMAN: No, again, I think it's about looking at the program. And that's what Elon Musk and President Trump or what President Trump has asked Elon to do. And his whole Cabinet, I mean, that whole Cabinet room is a strong group of leaders that are going to go to each of their departments and ask each person to make sure that there is no waste, fraud and abuse.

What is excess, what could be eliminated? I was a President and CEO of companies, and I know that you have to depend on your teammates to make sure that we eliminate the abuse of any sort of spending. So if we're going to look at all of government and including Medicaid and of course, all of the SNAP programs, the welfare programs, subsidies, tax credits, I think everything should be on the table to look at.

But again, I think we can do this without cutting the benefits that people in my district and other districts really depend on and eliminate the waste. This government hasn't had anything like this that I can remember in a long time. And then we're going to find a lot of savings.

DEAN: And yeah, and you mentioned a lot of people in Indiana. We got some stats on that Medicaid covering 41% of births in Indiana, three and eight children and two and three nursing home patients. As you were just saying, you know that.

STUTZMAN: Yeah.

DEAN: And I just want to ask on kind of their behalf, should they be worried about any of their benefits going away? STUTZMAN: No. I mean, you know, again, Medicaid is a partnership between the federal government and state government. And so I know that this is a big issue for our governor, Mike Braun in Indiana and our state legislature. They're already looking at this. Let me give you an example. I was talking to a hospital CEO and this just shows how the system is entirely upside down. 60% of his patients at a hospital system are on Medicaid, but it's only 30% of the revenue for that hospital system. That's just not a sustainable solution.

And so we're going to have to address the real problem, it's not Medicaid. The real problem is the cost of health care. Inflation has driven these costs out of control. And that's what we really need to start focusing on next is the cost of health care, not necessarily how these programs pay for them one way or the other. We shouldn't force those who depend on a program like Medicaid to pay for the program and the abuses that have, we know are going along with it right now.

DEAN: And I do want to ask you how you see this playing out in the sense that the Republican senators on the other side of the Capitol there are wanting changes to this proposed blueprint. House Speaker Mike Johnson just called, told my colleague, don't change too much because essentially it was tough to get that over the line in the House. Where do you think House Republicans will be willing to compromise with their Senate colleagues?

STUTZMAN: Well, you know, this is, we're a bicameral legislative body and, you know, being a House member, we have done our work. I'm on the House Budget Committee, and this was a tough lift. But at the same time, what I sense from those in our swing districts and those that are on, you know, districts across the spectrum in our conference is that we all know that we have $36 trillion of debt that is not sustainable.

We're paying more on our debt service and interest than what we're paying for our military. And so something has got to be addressed. And every member of our conference, for the most part, has all said we're here to make those difficult choices.

[14:15:02]

And I applaud them. And I think, you know, in the long run, we do the right thing on policy, politics will take care of itself.

DEAN: And I know you have said that the debt's important to you. You've called it the biggest threat to our national security. A lot of Republicans would like to see Trump's first term tax cuts made permanent. A nonpartisan Committee for a responsible budget estimating those could cost a minimum of $3.9 trillion to make permanent. Republicans trying to find some $2 trillion in cut cuts. Are you comfortable with that math?

STUTZMAN: Well, and I have been saying, you know, internally, and I know that the idea has been tossed around, but because of the Congressional Budget Office's scoring system, by making those tax rates permanent, that is a big cost to the federal government. But so I would, I've proposed and said that, look, we could extend these tax rates for another four or five years. That would bring that cost down. So that way we don't have to.

If we get into all of the spending in different programs and we see that it would cut Medicaid, I would say, look, let's back off the tax cuts and not affect Medicaid. So that's something that I've talked about and proposed because we can always come back in four years and make those tax cuts permanent, those tax rates. And that way Medicaid is not affected.

And I think that's where most of us are all at on the Republican conference, is that we want to make sure that we don't affect those folks in our districts that depend on Medicaid and been forced to go to Medicaid and making sure that the economy grows, we cut spending and then we start getting to a balanced budget. A balanced budget is really critical for us to start paying the debt down.

DEAN: Yeah. And would you vote no if it did make them permanent?

STUTZMAN: No, I would support them. I mean, in the long run, we want to make those tax rates permanent. But again, because of the Congressional Budget Office's scoring, they are saying that's a cost to the federal government. If that's what -- if what it takes is just to extend them for four or five years until we see what the economy does and we come back later when those are about to expire again, we can evaluate that.

But I would prefer that we look at it from that perspective if we have to. But if we can make them permanent and make sure that Medicaid is strong for not only those who are currently using the program, but it's strong for future generations, that's what our end goal is.

DEAN: All right. Congressman MarIin Stutzman, thanks so much for your time. We appreciate it.

STUTZMAN: Thank you.

DEAN: So to come this hour, Hamas is expected to hand over the bodies of four Israeli hostages' just hours from now. But this exchange is going to look very different from what we've previously seen.

Plus, the Supreme Court appears poised to side with a straight woman who claims she is the victim of, quote, reverse discrimination. We'll lay out that case for you.

And a little bit later, DNI director Tulsi Gabbard saying more than 100 U.S. intelligence officers will be fired for writing sexually explicit messages in a work chat. That and much more coming up here on CNN News Central.

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DEAN: In just under two hours from now, the bodies of four Israeli hostages held in Gaza are expected to be exchanged for hundreds of Palestinian prisoners. This is the final handover under phase one of the Israel Hamas cease fire deal. And it appeared to be in doubt since Saturday, Israel has delayed the release of Palestinian prisoners protesting what it called, quote, humiliating ceremonies held by Hamas during previous releases. Hamas now says it will scrap all future handover ceremonies.

CNN's Jeremy Diamond is live in Tel Aviv. And Jeremy, there has certainly been a lot of uncertainty around how this will play out. Where do things stand right now?

JEREMY DIAMOND, CNN JERUSALEM CORRESPONDENT: Without a doubt. And all of that uncertainty stemmed from Saturday when Israel refused to release 620 Palestinian prisoners in exchange for the last four living Israeli hostages scheduled to be released during the first phase of this cease fire agreement, citing these ceremonies that Hamas has been holding and what they called humiliating displays of some of the hostages who were still remaining in Gaza.

So Israel declining for the last several days to release those 620 Palestinian prisoners. And as a result there was uncertainty about whether or not we would actually see what is expected to be perhaps the last exchange of hostages and prisoners during the first phase of this cease fire agreement.

But just in the last few hours, Israel and Hamas have indeed reached a deal under which Hamas is expected to release the bodies of four hostages this evening, Tsachi Idan, Itzhak Elgarat, Ohad Yahalomi and Shlomo Mansour. Their bodies will indeed be handed over after being held captive by Hamas over the course of the last 16 months. Only following DNA identification will Israel begin to release waves of Palestinian prisoners scheduled to be released.

But earlier today, what we also saw across the country of Israel were emotional, sobering and very somber scenes as the bodies of Kfir, Ariel and Shia Shiri Bibas, the two youngest hostages and their mother were laid to rest today. We saw this winding funeral procession going from central Israel all the way to their final resting place near Kibbutz near Oz, from which they were taken hostage on October 7th.

We also heard today from their father, Yarden Bibas, who was freed just a few weeks ago in this ceasefire deal by Hamas, but returned to learn that his wife and his two young boys had indeed been killed.

[14:25:06]

Today, Yarden Bibas asks for his wife and for his children's forgiveness that he did not protect them on that day. He said of Ariel, I hope that there are plenty of butterflies for you to watch, just like you did during our picnics. For Kfir, he said, I miss nibbling on you and hearing your laughter. And he said, I'm sorry I didn't protect you better. Heartbreaking scenes. Jessica?

DEAN: It truly is. Jeremy Diamond for us in Tel Aviv. Thank you for that reporting. Boris?

SANCHEZ: So late last night, President Trump posted what appeared to be an AI generated video on his Truth Social account. It's basically a promotion for his plan for Gaza, which is to essentially turn the enclave into a lavish Gulf resort. Here's part of that video.

SANCHEZ: Let's discuss with Kevin Baron. He's a National Security Analyst and Former Executive Editor for Defense One. Kevin, thanks so much for being with us. What did you make of this video?

KEVIN BARON, FORMER EXECUTIVE EDITOR, DEFENSE ONE: I mean, how many times we have to see something like this where it would be comical if it wasn't so serious and so exhausting? These images just, you know, they shock you and then you laugh and then you go, what are we doing and where are we living?

And in a time where, as the previous segment just showed, the hostages are being released, we're supposed to be getting to a new cease fire phase. We're supposed to be getting toward some kind of future for this region. The Saudi defense minister was just at the Pentagon this week as well.

So there are these enormous security concerns going on. And this kind of video just does nothing for American security or regional security. But it does show where Trump's head is right? It shows he's calling himself King Trump. He's putting out images of him as a giant idol in the middle of Gaza that looks like Vegas. I'm not sure what to say.

SANCHEZ: It reminds me a bit of when he went to meet with Kim Jong Un one on one, and he apparently showed him a trailer of what North Korean waterfront property would look like. He obviously views things very much from the perspective of a real estate tycoon. I do wonder, though, how this sort of video lands with Palestinians, those who support Hamas, those who don't support Hamas and want to find peace. Is this the kind of thing that just generates animosity?

BARON: I wonder, too, I wonder how many see it actually. I mean, who's watching truths -- you know, Trump's Truth Social account out there right now. I think if you think of it as what it would take to get to something like this, go back to his original statements when he mentioned this. He was, you know, giddily, saying -- giddily, giddily saying, we're going to expel all the Palestinians and rebuild this area to make it look, you know, to what these images look like.

And then he sees it and he, you know, promotes it just like he promoted a picture of Time Magazine for himself. Look, he's called himself King Trump in recent days. He's portraying himself as a savior for these areas, not for the Palestinian people. But like you said, because he's a real estate tycoon, he sees a business opportunity. We know there's family connections that would be involved in this.

There are people that think this is smoke and mirrors, this is ridiculousness, this is never going to happen. Focus on things that are more serious. But I think in the security world, this absolutely matters because why would anyone in that region who was serious about the future of Palestinian peace or the Palestinian prosperity think anything other than this is absolute absurdity?

SANCHEZ: To your point, about focusing on things that are more serious, and you mentioned we're supposed to be getting to the second phase of a cease fire deal. This 42 day truce is set to end this weekend. Negotiations over phase two were supposed to start several weeks ago. They haven't even started. Are you confident we're going to see some kind of deal?

BARON: Of course not. I mean, nobody should be. But also a deal for what? Right? In the last week, we've seen Israeli tanks going into the west bank and word that they're going to be there for a year. Israel seems to be doing everything possible, as it says, to prevent another attack like October 7th, to tamp out terrorism as much as they can.

In the military world where I used to cover the Pentagon and the old G what days they said, you know, you can't kill your way to freedom, you can't kill your way to the end of the war. There has to be a peace negotiation, but right now that's all that we're seeing. So a lot of people would like to know, what's that deal going to be? Is Netanyahu really on the side of Trump who wants the deal more than he wants anything, no matter what it looks like? Or is it going to be more the same?

SANCHEZ: So we saw this deal that Jeremy spoke about for the return of these four men's remains. We also saw these images, the huge crowds that came out for the Bibas funeral. Would you say that public opinion in Israel is at all altered by these developments? Does it sway people toward Netanyahu or more towards some sort of deal?

BARON: I mean, I would imagine people are pretty entrenched. We saw even the families, you know, wanting to keep --

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