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IRS Forever Barred from Auditing Trump and Family; Trump Adviser Files First Known Claim to $1.8 Billion Fund; Trump Critic Rep. Thomas Massie (R-KY) Loses Kentucky GOP Primary. Aired 10-10:30a ET

Aired May 20, 2026 - 10:00   ET

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

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JIM SCIUTTO, CNN ANCHOR: Happening now, first in line, we now know who has applied in the so-called anti-weaponization fund, as acting Attorney General Todd Blanche and other Justice Department officials defend the billion dollar pool against growing outrage.

Plus, are interest rates about to soar? The bond market is now flashing warning signs for your wallet. We'll make it make sense ahead.

And later, rushing to rescue, officials are saving people stranded and threatened by the exploding wildfires, as firefighters urgently work to contain multiple infernos.

Welcome to our viewers here in the United States and around the world. I'm Jim Sciutto. Wolf Blitzer and Pamela Brown are on assignment. You're in The Situation Room.

Happening now, just a jaw-dropping deal hammered out by President Trump's legal team is igniting new outrage. We're learning of a key new addition to the controversial settlement agreement between the president and the Internal Revenue Service over the leak of his tax information back in his first term. Acting Attorney General Todd Blanche quietly signed an agreement yesterday that, quote, forever bars any investigation of Trump, his family, and his businesses over previously filed tax returns.

A larger settlement was already under scrutiny because it's widely expected to benefit Trump's allies, possibly even including January 6th rioters at the U.S. Capitol. The fund of nearly $1.8 billion, taxpayer money, will compensate those who claim to have been targeted by a weaponized legal system, and we've learned of the first person known to file such a claim.

Let's go live now to CNN's Holmes Lybrand. So, Holmes, who is it?

HOLMES LYBRAND, CNN REPORTER: That's right, Jim. So the first person to file one of these claims is Michael Caputo. Now, he was a Trump adviser in the 2016 election, and he was one of the cast of characters involved in the Mueller investigation. Now, Caputo says that he and his family have suffered greatly because of this investigation, having to hire personal attorneys and pay for all of that legal representation.

It's important to notice -- to note, rather, that Caputo was never charged, so he could represent a pretty clear case of somebody that this fund was meant to apply to.

So, as we see more and more individuals apply, Caputo being the first, and really maybe a very good test case of who the Trump administration thinks that this fund will apply to.

SCIUTTO: And, of course, many hundreds of millions of dollars at stake, and, again, taxpayer money, we should note.

Holmes Lybrand, thanks so much.

LYBRAND: Thank you, Jim.

SCIUTTO: Well, happening now, the Justice Department is quietly expanding the settlement between President Trump and the IRS. CNN's learning about this extraordinary new provision in that deal barring the IRS from prosecuting or pursuing past tax issues against the president, his family, and his companies.

CNN's Alayna Treene is at the White House. I mean, this is quite expansive here, and, of course, directly serves the president's and his family's interests.

ALAYNA TREENE, CNN WHITE HOUSE CORRESPONDENT: That's right. It's also adding to a lot of criticism, Jim, that this is a lot of self-dealing on behalf of the president.

Now, I do want to highlight what you mentioned, that this provision or kind of addendum that we saw them add quietly yesterday to this announcement about the broader, you know, nearly $1.8 billion fund that they are setting up for those who claim that they were wronged by past Justice Department.

You know, this addition now says that it protects the president, his family members, and their businesses from past, so again, it's only backwards-looking different tax issues that the IRS might fund.

I will note that that, of course, the president could always kind of issue this blanket pardon when he's out of office for future tax issues that he could face. So, keep that in mind.

But, look, I think this just adds to a lot of the uncertainty around how this is actually going to work, and the skepticism, again, of whether or not this is really self-dealing by the president, because, obviously, I mean, the people who are involved in this, these are all Trump administration lawyers who helped negotiate with the White House, at the Justice Department, people at the IRS.

But they're also working with the president's own lawyers, not only now about this fund that people are arguing could disproportionately go to Trump allies, but also now about potentially benefiting the president himself.

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So, we're in unchartered waters here, Jim, and I think a lot of questions for the taxpayers moving forward.

SCIUTTO: No question, and he's appointing the people who will make those decisions.

So, President Trump on his way to give the commencement address at the U.S. Coast Guard Academy, spoke before getting on the plane, including about the Israeli prime minister. Tell us what the headlines were.

TREENE: Yes, that's right. He was asked specifically about a call that he had with the Israeli prime minister, Benjamin Netanyahu, yesterday, one that was rumored to be a little bit dramatic. But the president said it went fine, then also went on to argue that he thinks Netanyahu will essentially do whatever he tells him to do. Listen.

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REPORTER: What have you said to Prime Minister Netanyahu about Iran and how long to hold off on strikes?

DONALD TRUMP, U.S. PRESIDENT: He's fine. He'll do whatever I want him to do. He's a very good man. He'll do whatever I want him to do. And he's a great guy. To me, he's a great guy. Don't forget he was a wartime prime minister, and he's not treated right in Israel, in my opinion. I'm right now at 99 percent in Israel. I could run for prime minister. So, maybe after I do this, I'll go to Israel, run for prime minister. I had a poll this morning, I'm 99 percent, so that's good.

But, no, he's a wartime prime minister and I just don't think they treat him well.

(END VIDEO CLIP)

TREENE: Now, Jim, obviously the United States and Israel entered this war together. They both had joint strikes on Tehran initially when this war broke out. But there has been a big question, of course, is that as this war has continued, would the objectives that Netanyahu has and those that President Trump has, would they diverge at all?

But the president has been clear in trying to insist that when he decides the war is over, Israel's leadership will be ready to do so, too.

SCIUTTO: It would be interesting to hear what the Israeli prime minister thinks about the president saying he'll do whatever he wants him to do.

Alayna Treene at the White House, thanks so much.

Still ahead, strongman summit. Right now, Russian President Putin and China's President Xi are meeting and already taking a veiled jab at the U.S. We're going to bring you the latest. And later, an indictment three decades in the making, how the Justice Department built a criminal case against former Cuban President Raul Castro. The new reporting straight ahead.

Please do stay with us. You're in The Situation Room.

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SCIUTTO: This breaking news just in to CNN, and it's sad news. Former Democratic Congressman Barney Frank, a frequent guest on this network, has passed away. The longtime liberal advocate represented Massachusetts in Congress for decades. He was also among the first openly gay members of Congress.

He spoke to CNN's Jake Tapper just a few weeks ago.

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FMR. REP. BARNEY FRANK (D-MA): I am concerned that among some in my party, there's a kind of, or there has been, a flavor-of-the-month tendency so that somebody who's new and hasn't been able to do much is somehow preferred over people who understand the importance of hard work to get controversial things adopted.

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SCIUTTO: That's Barney Frank speaking to CNN just a couple of weeks ago. His sister confirmed his death to CNN, saying, quote, he was a wonderful brother. I was lucky to be his sister. I will miss him. Barney Frank was 86 years old.

Well, happening now, President Trump is proving once again he holds a grip on the Republican Party, an ironclad one. Despite the rising cost of living, heightened gas prices, the ongoing war with Iran, unpopular even among many Republicans, President Trump has ousted a second Republican Congressional rival in just a matter of days.

Overnight, Kentucky Republican Congressman Thomas Massie lost his closely watched primary race to Trump-backed challenger and former Navy SEAL Ed Gallrein. It was one of the most expensive primaries in history.

Here's what President Trump had to say about Massie just yesterday.

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TRUMP: We won the Massie thing. He was a bad guy. He deserves to lose.

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SCIUTTO: But with months left in his term, Massie is signaling he does not plan to leave Washington quietly.

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REP. THOMAS MASSIE (R-KY): By the way, today is the six-month anniversary of the Epstein Files Transparency Act. We've taken out two dozen CEOs, an ambassador, a prince, a prime minister, a minister of culture. And that was just six months. I've got seven months left in Congress.

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SCIUTTO: Joining me now in The Situation Room, Republican strategist, former Trump campaign adviser, David Urban, and former senior adviser for the Hillary Clinton 2016 presidential campaign, Karen Finney. They are both CNN political commentators.

I do want to get to the politics, but, Karen, given your own work with Barney Frank, just your thoughts as he passes away.

KAREN FINNEY, CNN POLITICAL COMMENTATOR: You know, he was a larger than life figure in Congress at a time when we had some of these, we were just talking about, some of these larger than life figures who left a real indelible mark on the body. I mean, think about the Dodd- Frank, which was passed after the financial crisis, and to protect consumers.

And he was one of those -- you know, you may not have agreed with him. He was very smart.

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He was very effective. He knew how to -- he knew the rules. He knew how to work the rules. And, you know, his also position as an openly gay member of Congress was really important to the LGBTQ-plus community. So, it's a real loss.

But I loved seeing him talking to Jake Tapper because clearly right down to the end, he had -- you know, he had something to say.

SCIUTTO: No question.

FINNEY: Which is that's Barney Frank going out strong.

SCIUTTO: Yes, I believe the first member of Congress to marry someone of the same gender.

David Urban, you, of course, disagreed with him on many issues.

DAVID URBAN, CNN SENIOR POLITICAL COMMENTATOR: Yes, I agree --

SCIUTTO: But does he have a match today?

URBAN: Yes, I agree with Karen's comments, right? Like, you know, whether, it's kind of like Trump, whether you agree with the guy or not, he's very consequential. Whether you agree with Barney Frank or not, he was a smart individual, smart member of Congress. He knew how to legislate. He knew how to get things done. Dodd-Frank is a big -- you know, big piece of legislation that still remains out there. And so, you know, there are -- if you look across the Congress now, there's not that -- there's no Daniel Patrick Moynihans or Arlen Specters or, you know, these big personalities, Ted Stevens, John Warners. They were there, they kind of, you know, cast a large shadow. And it doesn't seem that those individuals exist anymore in our Congress. And maybe they do and I'm just missing it. Maybe I'm pining -- maybe I'm pining nostalgia for my time back on the Hill. But it's a -- I think it was a different place and time, and things seem a little bit less consequential in terms of things that get accomplished on Capitol Hill.

When I was there, we passed 13 individual spending bills. Each year we passed a spending bill. That whole Schoolhouse Rock, I'm just a bill on Capitol Hill, like that's how things actually worked. And today, yes, it's like -- and today it's generally, you know, C.R.s, omnibuses, things don't get done, committees don't work the way they're supposed to. There's no regular order.

SCIUTTO: Could you pass a Dodd-Frank today?

URBAN: No.

SCIUTTO: Could you pass the Civil Rights Act today, right?

URBAN: So it's different.

FINNEY: Well, I think certainly not given what's going on in the country.

SCIUTTO: Well, court notwithstanding. Okay, let's get to the politics of last night, because President Trump, despite his approval ratings latest CNN poll of polls have him at 36 percent, I mean, typically in the 30s that's lousy territory for a president to be in, but, David Urban, he still clearly controls his Republican Party.

URBAN: Yes.

SCIUTTO: Is that good for the battle but bad for the war in the midterms?

URBAN: Listen, here's the fact that I know. The president the other day, it was yesterday, loves our Harry Enten, right, loves Harry because Harry's got the poll that says 100 percent of Republicans love Donald Trump. There was that poll that Harry had that one time, right?

SCIUTTO: Yes, which is not actually a reliable poll but --

URBAN: But it's the -- so this is -- make no doubt, this is Donald Trump's party, right? There is no doubt that in this upcoming election we're going to have next Tuesday in Texas with Cornyn and Paxton, the people, after the Trump -- you know, the Trump endorsement, is it more likely you're going to vote for the Paxton? 60 percent of the people said it's more likely now to support the president. So, 100 percent this is the president's party.

And you mentioned Nancy Pelosi. Donald Trump admired Nancy Pelosi. You know why? Because she ruled with an iron fist. If you crossed Nancy Pelosi, you were dead. And people in the caucus -- and people in the caucus knew that Nancy Pelosi was tough.

And so that's what Donald, that's what Donald Trump wanted in his own party, and he's like, listen, I'll be the enforcer. If you're Thomas Massie, you're not toeing the line, you're gone.

And so I don't -- I like -- I see the same parallel. He wants to control the party. And, Jim, to a certain extent, it is good for the upcoming general election, because you need to motivate the base, right? This isn't the big tent. This isn't a big tent.

SCIUTTO: But is he putting -- are these primaries creating the strongest candidates for the Republican Party to compete in November?

FINNEY: Exactly. So, he is solving his own problems in his primary but he is not solving the Republicans' problem in the general elections, because people are still concerned about the war, about the economy. We're actually also seeing people concerned about corruption in Washington, which voters are now saying they think that is keeping their prices high, which is very dangerous for Republicans when you have Trump coming out talking about a ballroom, a $1.8 billion slush fund. You know, again, people are looking at that and saying, wait a second, I can't -- particularly a general election electorate is asking those questions.

SCIUTTO: Fair enough. But you and I both know that an anti-Trump message is not and has not proven sufficient for Democrats to win across the board.

FINNEY: True.

SCIUTTO: When you see Democrats, for instance, deliberately running moderate candidates, you know the state of Pennsylvania well, like a Bob Brooks in Pennsylvania's Seventh, from a Republican standpoint, is that a strategy or is that the right strategy for Democrats?

URBAN: Yes, so that's more concerning to me, right? So, Democrats in their primaries, Karen's (INAUDIBLE), if you're running a Democratic primary, your message is, I'm going to go impeach Trump. When I get there, I'm going to burn down the House. Pennsylvania Three --

FINNEY: We're talking a lot about (INAUDIBLE).

URBAN: Pennsylvania three, which is the primarily African American district, it's actually the most Democratic district in America, in Philadelphia. The won, the person who won, Rabb, his message is, I'm going to go burn the place down, right, Trump and everybody, burn it down.

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That's not a message that wins. That's not a message of we're going to make things better for you. That's a message of, I'm a Democratic socialist, I want to tear things apart.

So, if Democrats are smart, they run people who are veterans, who are more moderate.

SCIUTTO: Like a Bob Brooks, a firefighter.

URBAN: Yes, a firefighter.

SCIUTTO: Do you see enough of that though nationally for the Democratic Party?

FINNEY: Yes. And I want to mention something else that people are not paying attention to that we're paying attention to. The gutting of the Voting Rights Act is hugely -- has been a real mobilizer. I was in Alabama over the weekend, black voters across the South. Look at what happened in Georgia yesterday with record turnout.

We are also focused -- we're very focused on control of Congress, but these state races are critical because the state power has been the place where Democrats have been able to hold off Trump.

SCIUTTO: And they're going to be redrawing those districts again.

URBAN: And just to that point, you know, real quickly to end, you know, we can't overlook things, like in Pennsylvania, Josh Shapiro's running for re-election at the top of the ticket, right? Josh wants to be -- you know, I don't know if he wants to be president of the United States, but I think he's --

SCIUTTO: That sounded like -- that sounds like a campaign start.

FINNEY: Probably a fair bet.

URBAN: But, Jim, you know, so he's going to want to run up big numbers, and that's going to have an impact on those Congressional seats, right?

SCIUTTO: That's right.

URBAN: So, let's pay attention every -- to the state races. Big state races are going to pull --

FINNEY: 36 governor's races.

URBAN: They're going to have this -- it's going to be like the moon, you know, pulling gravitational tides. So, that's going to have a big impact.

SCIUTTO: Like we saw in New Jersey or Virginia recently.

URBAN: Yes.

FINNEY: Absolutely.

SCIUTTO: David Urban, Karen Finney, thanks to you both.

Coming up, are interest rates for you and me about to soar? We're going to make it make sense next.

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SCIUTTO: Happening now, gas prices are rising yet again. The average cost of a gallon of gas now at $4.56, up from $2.98 back at the start of the Iran war. GasBuddy predicts there might be a few sense of relief over the holiday weekend, estimating $4.48 a gallon. On Memorial Day, that's still up $1.34 from the same time last year. And GasBuddy is warning we could see $5 a gallon for much of the summer if the Strait of Hormuz remains closed.

Happening now, a major warning sign for the global economy that could also have a massive impact on your wallet.

CNN Business Senior Reporter David Goldman is here. Make it make sense, David, what we're seeing in the bond markets.

DAVID GOLDMAN, CNN BUSINESS SENIOR REPORTER: Yes. Well, there's a market that you've probably not thought about for a while, that's the bond market, but it's actually signaling a worrying problem about the economies and you could end up paying for it.

So, when you buy a bond, you're basically acting like a bank. You loan money to the government or a company, and they issue you an IOU. So, that comes with interest. It's due on a specific date. So $100 bond at 5 percent for ten years, that could get you $163.86 before taxes. So, that's pretty good.

But the bond market functions like an old-fashioned scale, and when prices go down, the yield, or that's the interest that it pays, that goes up. And that's exactly what's happening here. And I have a scale today to talk about what is happening in the bond market.

So, bond prices, well, they are dropping like a rock, and they're just weighed down by a ton of problems that are happening in the economy right now, and that includes things like inflation. It includes debt. It's just the gobs of money that we're spending on things like A.I. and the war, a possible rate hike, and all the consumer spending that is fueling all of that.

And so we just hit a 19-year high for the 30-year yield. That's the highest since 2007, and we all remember what happened then. That was the Great Recession.

Now, the ten -year yield is also at its highest in over a year too. It's the last time that the ten-year got this high. Remember President Trump got cold feet and paused his liberation day tariffs.

Now, here's what that means for you. High yields, well, that causes problems for you. It also causes problems for the government because it has more money that it needs to finance its debt, leaving less for social services. And businesses pay more. That weighs on profits and stocks. And because mortgage rates, auto loans, and credit cards are all pegged to the ten-year yield, the more you're going to have to pay, the more that means that you might have to borrow money. SCIUTTO: Yes. And, listen, it's interesting because that was flashing red, you'll remember, last April during liberation day as well, and that was the thing that got Trump arguably to pull back from some of his worst tariffs. We'll see how this changes the policy here.

The only other question I had is, like what were you weighing down that side of the scale? Were those cookies for each thing, or what -- I want to know what those were.

GOLDMAN: I'm going to eat these later, Jim, but I'm going to save one for you. Don't worry. I got it.

SCIUTTO: Okay, please. All right, thanks so much. It's always hard to understand the bond market, David Goldman.

If you'd like David to help you make it make sense, email your question or send us a selfie video of your question to makeitmakesense@cnn.com, and you may get an answer.

Just ahead, a dangerously close call after a three-foot beam impales a car. We're going to have that story ahead.

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