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CNN NewsNight with Abby Phillip
Lindsay Clancy Triple-Murder Case Ends In Mistrial; Trump To Fed: Lower Rates Or I'll Stop Trading With Top Partners; Americans Could Face Highest Labor Day Gas Prices On Record. Aired 9-10p ET
Aired September 04, 2026 - 21:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[21:00:00]
ANDERSON COOPER, CNN HOST, ANDERSON COOPER 360: Is it the Secret Service who takes the lead on gathering information about any potential overseas threats?
RICHARD KOLKO, RETIRED FBI SPECIAL AGENT: Well, a lot of that comes through the intelligence community as well. Certainly, a lot of it funnels its way to the Secret Service, or all of it does, to see what action needs to be taken.
COOPER: All right.
KOLKO: But there are definitely different methods in the United States that gather this information, gather this intelligence, assess those threats, and they all have to be mitigated.
COOPER: Yes.
KOLKO: And they can work with the host countries as well, depending on where they are.
COOPER: Richard Kolko, thanks.
That's it for us. NEWSNIGHT WITH ABBY PHILLIP starts now.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE (voice-over): This is CNN Breaking News.
(END VIDEO CLIP)
ABBY PHILLIP, CNN HOST, CNN NEWSNIGHT WITH ABBY PHILLIP: Good evening. I'm Abby Phillip in New York.
Tonight. The Lindsay Clancy case declared a mistrial due to a deadlocked jury. The stunning outcome capped off 38 hours of deliberations over the last week, and a dramatic day in which Lindsay Clancy's defense attorney filed an emergency request to the Massachusetts Supreme Court to try to keep deliberations going. But in the end, the defense lost that appeal, and the jury sent another note, saying that they were still at an impasse.
(BEGIN VIDEO CLIP) JUDGE WILLIAM F. SULLIVAN, PLYMOUTH COUNTY SUPERIOR COURT: It is with a heavy heart that we report we are unable to come to a unanimous decision and will not be able to.
Under the statute and the case law, I don't feel I have any choice but to declare a mistrial.
(END VIDEO CLIP)
PHILLIP: The jurors here had a brutal task before them. They were weighing whether Lindsay Clancy, a former nurse who is accused of strangling her three young children to death, can be held criminally responsible for her actions.
Prosecutors say that she knew exactly what she was doing. But the defense says that she was suffering from postpartum psychosis that spiraled out of control.
Clancy's attorney seemed confident that the jury would have acquitted his client if it weren't for one juror.
(BEGIN VIDEO CLIP)
KEVIN REDDINGTON, LINDSAY CLANCY DEFENSE ATTORNEY: They know that they were robbed by one man, for whatever his agenda was, who stole seven weeks of the life of these other jurors.
UNIDENTIFIED MALE: Is Lindsay ready for a second trial?
REDDINGTON: Lindsay is very, very, very strong. She is a very, very intelligent young woman, very emotionally invested. And just a tragic -- she's a classic example of a tragic person. Her life is a tragedy, and she was robbed by this man.
(END VIDEO CLIP)
PHILLIP: Joining us at the table is:
CNN Correspondent, Kara Scannell.
Criminal defense attorney, Stacy Schneider.
Legal analyst from Midas Touch, Dina Doll.
And retired U.S. district court judge, Judge Shira Scheindlin.
Just Kara, as we get started here. I mean, you've been covering this trial. What is the prosecutor's office saying right now about the prospect that this incredibly high-profile trial, that it really has captivated the entire country, could go to trial again.
KARA SCANNELL, CNN CORRESPONDENT: Well, the D.A. today is saying that he will make this decision shortly. So, even out of the gate, he wasn't committing to bringing this case to a retrial. But a lot of his statement was saying that he was doing this for the victims, the three young children who died. And he was even heckled during this press conference that he gave afterwards, where people were saying that Clancy was the victim, and he was saying, No, you know, this was not an insensitive case. What's insensitive is the killing of three young children. So, he's laid out that this is something that they firmly stand behind. He's not second- guessing himself.
But they'll probably also evaluate if this really was a 11-to-one jury verdict that would have gone toward, if not an acquittal, not guilty because, she was not criminally responsible. He said that they were also going to have discussions and conversations about that, and that's why no decision was imminent today.
PHILLIP: So, Judge, one of the issues here in this case is this insanity defense, and it is -- that is the big issue for so many people who are just bystanders watching, but also from a legal perspective.
This professor of law who studies, actually, women, like Lindsay Clancy, who kill their own children, says that Ms. Clancy is lucky in a sense because in Massachusetts it's one of a handful of states where they've actually updated this insanity defense. Four states don't even allow you to do this. By contrast, Massachusetts has held that defendants should not be judged criminally responsible if mental illness renders them unable to control their actions to follow the law.
How hard did that make the job of the prosecutors in this case? And do you understand why the jury would have not been able to get to a unanimous verdict, or they might have been on the verge of acquitting her?
[21:05:00]
SHIRA SCHEINDLIN, RETIRED U.S. DISTRICT COURT JUDGE: So, that's three questions at once. But the prosecutor's job was surely hard because they had to prove beyond a reasonable doubt, that she wasn't acting because she was mentally disturbed, almost having to prove the negative, and there was a lot--
PHILLIP: Prove that she's sane in other words. Not--
(CROSSTALK)
SCHEINDLIN: Yes, well that the -- right that she--
PHILLIP: Yes.
SCHEINDLIN: Right. Well that--
PHILLIP: Yes.
SCHEINDLIN: -that she wasn't, yes. But that's hard to prove in a way. So, I can see where the jury had a particularly hard job because the jury is hearing sort of both sides, and there almost had to be reasonable doubt, whether she acted intentionally and willfully and not because she was mentally disturbed. So, I can see that the jury would have a lot of trouble reaching that verdict. That's why the speculation is that it was a 11-to-one for an acquittal, right?
PHILLIP: What, in your view, is there one thing that stands out to you that would have really created that reasonable doubt for the jury?
SCHEINDLIN: Yes, there's a lot of evidence that she really had this syndrome, this postpartum psychosis. And if the jury thought that she did, then she's not criminally responsible for her actions.
And I would understand why the jury would have that problem and why they would think that the one juror was not listening to the judge about what is a reasonable doubt. Because it almost sounds like any juror would have a reasonable doubt about her mental capacity to make the decisions she made.
PHILLIP: Yes.
And Stacy, would you have retried this -- would you try to retry this case if you were a prosecutor?
STACY SCHNEIDER, CRIMINAL DEFENSE ATTORNEY: I almost think the prosecution has an obligation to the community to retry the case because there were three children who were murdered. Whether or not they have a strong case when they go back again, they're going to have the same case they had before, which their -- their argument was that this was an intentional killing.
They have a murder one charge there, that this was premeditated, she planned it out, and their whole case was based on this timeline of her sending the husband out to the CVS to pick up medication for one of the kids, and then pick up Chinese food for dinner. That was the case.
But their case did not take into account, or didn't focus on the fact that she jumped out of a window -- she slit her wrists and jumped out of a second floor story window, allegedly after killing the kids. Now it's not alleged anymore, but I guess it still is actually because it's--
PHILLIP: Well but she -- she -- she acknowledges. She admits to killing the children. Isn't it?
SCHNEIDER: Well she--
PHILLIP: That's not so much in question at this point.
SCHNEIDER: Well, her lawyer made that admission on her behalf. There's no actual real statement from her, which was so interesting in this trial. All the evidence presented, the husband said that, My wife killed the kids, on the 9-1-1 tape, but there's no actual admission from her. But her attorney embraced that admission. So you are right, that way, that exists.
PHILLIP: All right.
Dina? DINA DOLL, LEGAL ANALYST, MEIDASTOUCH, HOST, "MISSTRIAL" PODCAST, MEIDASTOUCH HOST: Yes, I mean, I think what you said about the Massachusetts burden of proof is really the entire case because this was a battle of the experts. It would always be an insanity case, and the defense could have not put on any expert, and still possibly won. I mean that's how hard it is to overcome that burden of proof that the prosecution had to put on.
And then, just in terms of whether or not -- you know, the D.A. probably overcharged this case to begin with. The fact that he went for first degree murder rather than just manslaughter in itself also would have made it much harder to convict.
We see it time and time again. When you overcharge a case, you lose credibility as a prosecutor. You could say, Well, they showed enough evidence for manslaughter; the jury could have just picked that. But the problem is, when the prosecution gives you all these arguments for a first-degree murder charge that the jury doesn't really buy, you lose the credibility for the entire case.
PHILLIP: And let me play a little bit more from Lindsay Clancy's attorney. He really went hard against the one juror who was the holdout, apparently, and he talked about the prospect that she could get a fair trial if this were retried.
(BEGIN VIDEO CLIP)
REDDINGTON: They know that they were robbed by one man.
I hope that guy can sleep well.
I don't know if we will ever be able to get jurors that aren't aware of this case anywhere: New York, Washington, Georgia, Japan, India. I don't know. Anywhere.
(END VIDEO CLIP)
PHILLIP: Kara, I mean, in a way, I don't know, maybe he's right about that because this is -- I've seen people describe this as sort of like a O.J. Simpson-like trial and the way that it's taken over social media and it's become a proxy for other conversations. But is he right that they would have a hard time finding a jury? And what was the reaction to the way that he really went after this one juror, not just today, but as we built up to this moment?
[21:10:00]
SCANNELL: Right. I mean, it wasn't just today. He accused the juror of lying to the judge under oath during the proceedings because, he so wanted to make the point that this juror needed to get off the case because he was that confident that he would get a new juror to come in and then win the case.
PHILLIP: Even at a late stage in the case when they were deliberating?
SCANNELL: Yes, I mean he was trying that up until the end. I mean up until the judge said, I have no choice but to declare a mistrial, and he's like, Stop. Give me an hour to run to the highest court in Massachusetts to try to get that judge to intervene and hold you off from declaring a mistrial. Because he wanted further probing of this juror. I think, also, to build a foundation so he could challenge the juror and say that the juror should have thrown off because they were acting improperly.
It's very hard to get a juror thrown off of a case, but if you could lay the foundation, that would have been the argument.
But people were shocked that he was going so hard after this juror, both in the courtroom and then outside of it, and is that a potential intimidation factor for future juries, is a question that I would ask the lawyers.
PHILLIP: What do you think, Judge?
SCHEINDLIN: I think that jurors really do listen to instructions and really do what they think is right.
I think this juror just disagreed with the other 11 and had a right to do that, and there's no reason, no basis, to think that he refused to deliberate.
So, I think the judge made the right decision. He said: I have no basis to believe that he refused to deliberate. Therefore, I have no basis to toss him off the jury, and therefore I have to accept that this jury could not reach a unanimous verdict.
And I had the identical situation once, of a 11-to-one, which I now know was for conviction. But one juror held out and said, Nope, that's not my view. And the other jurors said, He's refusing to deliberate. And I did question that juror in court, and I decided he was deliberating. He just agreed -- disagreed with the other 11. So, a mistrial was declared, and the second jury, by the way, acquitted. So, this jury was a 11-to-one for conviction. And the second jury--
PHILLIP: Wow. So there's--
(CROSSTALK)
SCHEINDLIN: Yes, the second jury--
PHILLIP: Yes.
SCHEINDLIN: --acquitted.
PHILLIP: Yes. I mean, but is there a difference between a refusal to deliberate and a juror potentially having a view--
SCHNEIDER: Yes.
PHILLIP: --of the morality of what happened. Because I mean there is an aspect of this that is, as the Massachusetts District Attorney pointed out, that is about three young children who were murdered. And there are many people in this country who believe that it doesn't matter what the excuse is, that you are responsible.
And is that different from you're refusing to deliberate? Or is that the same thing as, There is reasonable doubt, doesn't matter what your morals are, the law says what the law says?
SCHNEIDER: There's a big difference between the two. And I think, like the Judge said, the outcome that the judge picked was the right one, despite all of the yelling and paper-throwing from the defense attorney.
If a juror is engaged in misconduct in the jury room, then yes, they could be removed and should be removed off of the case. Misconduct is blatantly stating, I'm not going to follow the law, not participating in deliberations, doing something that's obvious.
But just sitting in a jury room and saying to the 11 other jurors, I don't agree with you. I see three -- I'm just guessing this is what happened in there. It seems the most obvious -- I don't agree with all of you. These children are dead. I believe the prosecution's case that she did it intentionally, I'm not buying the mental illness claim, I'm not changing that.
That juror has every right to do that, and the defense attorney to go out and kind of attack and rake the juror over the coals for being the holdout. Yes, it's disappointing, he didn't get the verdict he wanted for his client. Maybe his client deserved that verdict.
But we still have a system of 12 people, and they all come from different viewpoints and different backgrounds and look at evidence differently. And the law provides, if there's a doubt and it's reasonable, then you -- then it's got -- the proof has to go beyond that. If there's a doubt. Maybe this person didn't have a doubt. Maybe this holdout juror doubted one little piece of the case, but thought, I thought this was an intentional act.
PHILLIP: Right.
SCHNEIDER: We don't know.
PHILLIP: We have more to discuss as we go forward in this show.
Next for us. The emotions ran high inside and outside of this courthouse today. Why the trial has resonated all around the country?
Plus, the President threatens the Fed, and that's after a good jobs report.
We'll be right back.
[21:15:00]
(COMMERCIAL BREAK)
PHILLIP: For weeks, the Lindsay Clancy case has captivated the nation, not just because of the disturbing nature of the crimes at hand, but because of its renewed focus on mental illness and maternal mental health care in particular. That's why dozens of people, mostly women, have been showing up to the courthouse, clad in pink, to signal their support for her.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: We're here to send one message, and that message is that it should not take tragedy for people to start paying attention to mental health.
(CHEERING)
(APPLAUSE)
UNIDENTIFIED FEMALE: I believe that women deserve support, and Lindsay didn't receive the support that she deserved.
UNIDENTIFIED FEMALE: We love you, Lindsay, and we're here for you.
UNIDENTIFIED FEMALE: I really feel like the village needs to come back around women after they have children.
UNIDENTIFIED FEMALE: I hope that doctors will not just dismiss women because that is what's happened, decade after decade after decade.
(END VIDEO CLIP)
PHILLIP: Joining us now at the table is Dr. Catherine Birndorf. She is a reproductive psychiatrist, and a Clinical Associate Professor of Psychiatry and Obstetrics & Gynecology at Weill Cornell Medical College.
[21:20:00]
Doctor, the proxy fight that this case has become about postpartum health care for women and mental health is -- it's what brought this case to my attention. I'm expecting my second child. My entire feed, for a time, was about Lindsay Clancy, and about how many medications she was on, how many times she sought treatment.
Do you think that all of that validates this idea that she really was not in control of herself in the minutes or however long it took, for these murders to be -- to take place.
DR. CATHERINE BIRNDORF, REPRODUCTIVE PSYCHIATRIST, CO-FOUNDER, CEO, AND MEDICAL DIRECTOR OF THE MOTHERHOOD CENTER OF NEW YORK, CLINICAL ASSOCIATE PROFESSOR OF PSYCHIATRY AND OBSTETRICS & GYNECOLOGY, WEILL CORNELL MEDICAL COLLEGE: I think you can safely say that she was not well, not well, and mentally ill for a long time.
And I think people struggle to believe that mothers can have mental illness, as it relates to pregnancy, childbirth, and postpartum. We're not comfortable with that. We don't want to believe it, even though we accept medical -- we accept other issues like hypertension, diabetes, all those things that you get checked for, right, during pregnancy and postpartum. But if it's mental illness, somehow the taboo remains.
And so, it's very hard to believe, at the time of what happened, that she could have been and was psychotic.
PHILLIP: And just one note on the nature of postpartum psychosis. I've heard several experts describe it as something that can come and go.
BIRNDORF: Yes.
PHILLIP: And that was such a key issue in this case. Because the prosecution was basically making the argument, Well, she was acting perfectly normally in this moment--
BIRNDORF: Yes.
PHILLIP: --She sent her husband to go get dinner. She did this. She did that.
What do you make of that?
BIRNDORF: Entirely consistent with postpartum psychosis, period, right? That you can believe something very factually, truly, unshakably, that is a delusion and a psychotic belief, and be behaving entirely normally. We see this every day at The Motherhood Center. I was interviewing women today, trying to understand what was happening. They are psychotic, but appear totally fine otherwise.
PHILLIP: So, Stacy, there's a -- it's become a little political, to be honest, because I think a lot of the -- lot of conservatives, especially if you're pro-life or anti-abortion, this is sort of a big issue for them.
And one of -- one of these commentators said that -- this is Lila Rose. She said, Even if Lindsay was suffering from psychosis -- something that must ultimately be determined by the evidence and medical experts -- we still have to wrestle with a difficult question: Does mental illness automatically erase moral responsibility?... Ultimately, I don't want to live in a society where explaining evil becomes synonymous with medicalizing and excusing it.
I think that's -- there is a legitimate question in there about all crimes. I mean, some people have asked the question: Aren't all crimes, to some extent, a result of people who are mentally disturbed?
SCHNEIDER: Yes, I mean, look, it's a fascinating philosophical question. But from a practical basis, the law is designed -- to answer your question. For example, an insanity plea, or being found not guilty by reason of insanity, means that you are suffering from a mental disease or defect, and the second part of that is, where you cannot distinguish the difference between right and wrong. So, the disease is causing your inability to make the distinction between a criminal act and a non-criminal act. Those words work.
There are -- this is not the first insanity defense case. People are incarcerated into prison hospitals because they are found not guilty by reason of insanity. There are different levels of psychosis that the jurors consider. And in this trial, they did a good job, the defense, they were very careful in laying out the history of the psychosis. And even the very practical parts of her daily life -- there was this one text that really stood out to me. She texted her mother or her mother-in-law. She was about to go to bed for the evening, and she had to take this new medication. And she said, I'm about to take this medication, and I'm really scared to take it. Because those antipsychotic drugs or psychotropic drugs cause such severe reactions, we do know -- we know that.
PHILLIP: There were so many people outside of this courthouse. Let me just play -- this is a couple of people. One of them actually is a man, talking to a reporter about some of the darker sides of the commentary around this case. Let me play it.
[21:25:00]
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: And then there's a third party involved, which is the husband. So, that's where I have the problem. Because I'm very traditional, to be honest with you. And I was a man in my household for 42 years so far. Nothing like that is going down in my house. Because there had to be signs.
UNIDENTIFIED FEMALE: And was there a moment in the trial, some evidence that kind of made you start thinking about like supporting Lindsay, and this kind of like brought it home for you?
UNIDENTIFIED FEMALE: Yes, I could only hear, Patrick said, so many times.
(END VIDEO CLIP)
PHILLIP: OK. Patrick is her ex-husband. There is a -- there are conspiracies out there that he was actually responsible. Even though, as we talked about earlier, her lawyer has acknowledged that she was responsible for the murders. The case is just whether or not she was insane.
What do you make of the role that Patrick kind of took on in the broader commentary around this case?
SCANNELL: I mean, he is someone that, especially online, people have focused on. He testified for the prosecution, but his testimony was very helpful, in many ways, to Clancy as well. He put a lot of empathy toward her. But there are the questions of the responsibility.
And even a reporter had asked Reddington, Clancy's lawyer, about him today, and saying, People online are saying that he was responsible. And he's like, Well, I didn't say that, you know, I'm going to leave it there.
I think that was probably also may be helpful in the case, just to lay questions on the thoroughness of the prosecution's case and the investigation by the police department there. And interestingly, I thought, afterwards, Clancy's lawyers came out and said that it would be extraordinarily painful for a retrial. So, he's signaling that he doesn't want a retrial of--
PHILLIP: But he's--
SCANNELL: --that would deal with the murder of his kids.
PHILLIP: He's moved on with his life. He's remarried, I believe.
DOLL: Yes. He moved to New York City.
PHILLIP: He moved to another state, I mean. So there's that. But I mean, I think people are -- there's -- there's a difference between saying she deserved more help, and Oh, actually, he's the one responsible for these horrific deaths.
There was a 9-1-1 call where he's reporting his three children murdered. That's not something that is easy to make up. Let's put it that way.
But I mean, the cultural element of this case, taking on a life of its own, and women coming forward and saying, I was scared that this could have been me at some point. That's what's driven this to the forefront of public opinion.
DOLL: Absolutely. Usually, the mother on trial for killing her children has no shot ever. But in this case, because it was the fact that she tried to get help so many times and couldn't, women and mothers in particular really sympathize with her.
Then you got this right, having these talking points, politicizing it in a way that was, I thought, so disgusting. Because this is a tragedy. It is a tragedy for those precious children, as it is a tragedy for the mother.
And because women, like that person had said in your interview there, feel like they have been dismissed by the medical community over and over again. I do not see how Republicans then dismissing, women talking about their concerns is a good thing.
I mean, the fact of the matter is, is that she legitimately didn't get the help she needed. And the more mental health help a mother gets, it helps the children.
PHILLIP: Yes, Doctor, you're nodding your head.
BIRNDORF: Absolutely. When moms are well, the kids are well. When they're not, in pregnancy and in postpartum, there are long-term repercussions that affect them at birth, beyond. They can have more mental health issues, learning disabilities, all kinds of things, substance use disorders, more criminality. There's a lot of -- there's a huge effect on society that's costly.
We should want to prevent these illnesses, treat. They're treatable. They're temporary. People can fully recover. We should be absolutely intervening to do that at all times. They're medical illnesses. There's no difference. And there's no place for politics.
PHILLIP: I mean, is there a -- I've seen the suggestion that the medical system doesn't even fully acknowledge postpartum psychosis--
BIRNDORF: Well--
PHILLIP: --as a real thing.
BIRNDORF: It's, as you, I'm sure, have been hearing, it's not in the DSM, the Diagnostics and Statistics Manual.
I evaluated a woman today, and we were debating -- she had postpartum psychosis, no doubt. Didn't sleep two days postpartum. Started to have -- get amped up. Started to have intrusive thoughts of harm to the baby. Was so scared. Ran to her husband. Went to the ER.
Now, when I'm having to write down what her diagnosis is, I'm saying to myself, Do I want to call this psychosis, not otherwise specified? Do I want to call this -- do I want to give it a modifier?
[21:30:00]
That's ridiculous. We all need to be able to come around this illness, have it be legitimate. It is a legitimate and well-researched illness, medical illness? Then we can get insurers to pay for it. We can get more funding for it. We can have treatment for it. And we can stop tragedies like this.
PHILLIP: Yes, the lack of continuity of care--
BIRNDORF: Yes.
PHILLIP: --is one of the things that really sort of struck out to me.
There's nothing that will bring those kids back or make anything about this case good, a mistrial, a guilty verdict, a not-guilty verdict. But this conversation is one that clearly penetrates really deep in our society and needs to be taken very seriously.
Coming up next for us. The President sends a warning to the Federal Reserve: cut interest rates, or I'll cut trade with some of our key partners.
We'll be right back.
(COMMERCIAL BREAK)
[21:35:00]
PHILLIP: Tonight, two months from the midterms, Donald Trump got a desperately-needed rebound. But is he throwing away the win?
The U.S. labor market added 162,000 jobs in August. That's the strongest number since March, and more than double what economists had expected. The job gains snap a months-long stretch of poor job growth, and August also marked the first increase in the labor force participation rate in eight months.
Now, the report wasn't all good news, as wage growth slowed, again, landing at a five-year low. It's also the fourth month in a row that Americans' pay gains were outpaced by inflation.
And to make matters worse, just minutes after this report was released, the President threatened to stop the U.S. from trading with top partners unless the Federal Reserve lowers interest rates at its upcoming meeting. Quote, "LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT," Trump said in a post on Truth Social, "IT'S BETTER THAN TARIFFS! The Fed Board, with its great new leader, must get smart - BE PATRIOTS for a change."
Now, before we open it up to the table here, we want to invite you at home to join our debate. Head to cnn.com/abby. Weigh in there. We'll get to some of your comments as we go throughout the show.
Natasha, this is a good jobs report for the President, particularly since it signals that for this year, job growth is better than last year. But then, he steps on it by posting something that, frankly, is pretty economically illiterate and doesn't demonstrate an understanding of how the economy works.
NATASHA SARIN, PROFESSOR, YALE LAW SCHOOL, PRESIDENT, THE BUDGET LAB AT YALE: Indeed, I can't really explain it to you. He threatened the Federal Reserve with tariffs on other countries. I've never heard such a thing.
And by the way, it is just the case that a Federal Reserve that's looking at the nature of the economy right now and watching a job market that is doing very well, that is quite strong, where unemployment is in the low fours, and is seeing inflation that has not been anywhere near expectations since the post-pandemic period, is obviously looking at this and seeing that it needs to think seriously about increasing interest rates, definitely not decreasing them, and that's what the market's expecting.
The odds of a rate increase at the next Fed meeting have increased pretty substantially, by from around under 50 percent to over 60 percent as a result of this job sprint. So, I genuinely cannot, as an economist, articulate to you what the President is thinking.
PHILLIP: What is the President thinking, Scott?
SCOTT JENNINGS, CNN SENIOR POLITICAL COMMENTATOR, FORMER SPECIAL ASSISTANT, PRES. GEORGE W. BUSH, HOST, "THE SCOTT JENNINGS RADIO SHOW" ON SALEM RADIO: Well, number one, I think this is a continuation of his long-held belief that rates have been too high for too long. And I think when you tweet or post at the Fed, you're like working the refs, and he's hoping that they follow his lead on this. Of course, they don't have to, independent board.
But this is -- this is not new. He's wanted the rates lowered for a very long time. He thinks it's holding back the U.S. economy. I don't know what they're going to do. I think you could make a case, and some are already doing it, that the economy is running hot, and they need to -- they need to pay attention to that on the inflation side.
I do think the jobs report for him today, I agree with your assessment, it's a great report for him. 162,000 jobs blew away the forecasters' estimates, and they revised the last two months upward by 55,000 jobs. There was also a bounce in manufacturing activity, and we've seen a several months-long increase in the manufacturing index.
So, there is some evidence that this economy is resilient, that it has momentum, and it is tied to the policies of this president. And that is something, if they choose to focus on it, and the Republicans choose to focus on it, can work in the midterm.
PETE SEAT, FORMER WH SPOKESMAN, PRES. GEORGE W. BUSH, VICE PRESIDENT, BOSE PUBLIC AFFAIRS GROUP, SUBSTACK AUTHOR, "RIGHT ON CUE": Well, I want to go back to what you said about using tariffs as a threat to the Fed.
For someone who has been talking about tariffs in a very positive way for a decade or more, this is kind of his first acknowledgement that tariffs might be bad--
SARIN: Yes, some good news in that--
(CROSSTALK)
SEAT: --and to say, Hey, I'm going to do something really, really bad--
SARIN: It's better than tariffs.
SEAT: --unless you do something that I want--
PHILLIP: My head is spinning already.
SARIN: Yes.
SEAT: Right?
PHILLIP: I am not -- like what is -- what's going on?
SEAT: Well but--
PHILLIP: Yes, to your point. I mean, I thought he said the tariffs were actually supposed to help us. So, why is it a threat?
SEAT: Well, it's only a threat if, I guess, if the Fed does what he wants.
But to Scott's point. He has been long fixated on interest rates. In his mind, it's strength and weakness. Lower rates in his mind mean you're a stronger country. But what comes with lower rates is potentially higher inflation, and that's what the Fed has to balance.
[21:40:00]
He on this is an absolutist. He sees it very clearly. But the Fed, part of their mandate, is to ensure that prices don't go up any higher than they're going up, and I don't think he appreciates the struggle that they face. PHILLIP: I mean, can we just acknowledge that the President doesn't seem to understand how economics works. I mean, you said he doesn't appreciate it. He doesn't seem like he actually even understands it.
MIKE NELLIS, FORMER SENIOR ADVISOR, KAMALA HARRIS CAMPAIGN, HOST, "ENDLESS URGENCY": Yes.
SEAT: Well, there's a -- there's a split, when it comes to trade deficits, when it comes to the interest rates--
PHILLIP: That's not what we're talking about. I mean, he--
SEAT: Not everybody universally believes the same thing.
PHILLIP: Yes, but it's commonsense that if the Fed is trying to battle inflation, which is still high, that's a fact, why would they lower rates when the job market is running hot? That doesn't make any sense.
SARIN: And by the way, it's actually quite confusing because the President wants to see mortgage rates come down, right? But the nature -- the Federal Reserve doesn't control your mortgage rate; it controls this intra bank lending rate. What's going to happen if the Fed decided to cut rates at its next meeting, is actually long-term rates are going to continue to go up--
NELLIS: Yes.
SARIN: --because of an expectation and understanding that as inflation continues to tick up, and if there's a Federal Reserve that isn't credibly committed to fighting it--
NELLIS: Right.
SARIN: --then you're going to be in a situation where you're in a risky environment.
JENNINGS: But if you didn't cut rates, just as a question, it would spur economic investment, would it not?
SARIN: So the thing about it, Scott, is actually no. Because the situation is going to be that--
JENNINGS: If it costs less -- if it costs less to borrow?
SARIN: No, no, no -- no, no. Very, very clear to articulate. We are in a situation where the administration is putting direct pressure on the Federal Reserve and trying to circumvent central bank independence.
We've actually experimented with that in the United States before. In the Nixon administration, Arthur Burns said, I'm going to do everything I can to help you get reelected, and I'm going to cut interest rates. And the result of that was inflation over two years, going from 3 to 13 percent and growth slowing.
And the same thing will happen here if Chair Warsh, which I hope he won't do, and has given every indication that he won't, actually fall sway to these political pressures.
NELLIS: So, I just want to jump in real quick because I think this conversation is predicated on the idea that the jobs report is actually right, and I'm, not to be a wet blanket, not convinced. Because they fired the head of the Bureau of Labor Statistics--
PHILLIP: Well--
JENNINGS: Because it's good news you're not convinced?
PHILLIP: Well--
(CROSSTALK)
NELLIS: No, no, no, it's not because it's good news.
JENNINGS: You're saying it's fake news?
PHILLIP: I mean, listen, I don't think--
NELLIS: No, well, I mean -- well you're the master of fake news--
JENNINGS: Just asking.
PHILLIP: --Justin Wolfers, who I really respect as an economic voice on a lot of things, and he is no dove about criticizing this President.
NELLIS: Sure.
PHILLIP: He posted today in anticipation of what you just said--
NELLIS: Yes.
PHILLIP: --that he does not believe that there is any funny business with this jobs report.
NELLIS: So, I have a hard time--
PHILLIP: And I will say -- the reason I will -- I'm going to say that is because we've talked about messing around with job numbers before, but people need to understand that revisions are normal--
NELLIS: Sure.
PHILLIP: --that changes month to month are normal. None of that is a sign that there's anything bad or nefarious going on, and we don't have any evidence of that.
The one thing we -- well, I will say, is the accuracy of the job numbers has been challenged by survey response rates.
NELLIS: Yes.
PHILLIP: That's a real thing. But that's different from somebody who's going in and tweaking with the number-- NELLIS: Yes, if -- but I want to -- I want to say this, which is like when the ADP report from yesterday was a lot more dire than this one was. Showed 17,000 manufacturing jobs were lost.
And I do bring in the credibility of the Trump administration here. They fired the head of the Bureau of Labor Statistics last year because they didn't like the numbers. They were pretty honest about that. They've been caught lying about the number of U.S. service men and women who have died or been hurt in the middle of this illegal war in Iran. Donald Trump lies about a lot, and it wouldn't be beneath them to do something like this.
So, two months before an election, suddenly the job market is hot. And here's the other problem too: is what's the value of creating 162,000 jobs in a month if you need to have two or three of those jobs to be able to afford your grocery bill?
PHILLIP: Yes.
SARIN: I really do want to sort of echo what Abby is saying and what Justin said. There's no evidence of any sort that there's any tampering with this jobs report. And in reality, I agree, it's great news for the labor market. But what you saw is the stock market actually reacted negatively to this positive report because of its understanding that what you're likely to see is an increase in interest rates as a result of it.
So, I don't even think that -- and I think that's why you saw the President's Truth Social post -- I don't even think that this positive jobs report is uniformly good news from the administration's perspective. But I really do not think that we should question the credibility of the data.
PHILLIP: So the other thing that I will say--
NELLIS: I think even the fact they lie about so much, I feel the need to question the credibility--
PHILLIP: Look, all I'll say is, tomorrow -- as my mother would say, tomorrow's another day.
NELLIS: Yes.
PHILLIP: There will be another jobs report, and that could be a revision of this jobs report.
NELLIS: Right. Right. Right.
PHILLIP: So -- so--
SARIN: Very likely to be impact.
PHILLIP: It's very likely to be. So, I mean, this is a snapshot in time in this moment. And one of the things about this jobs report that it does show, there's some seasonal hiring that's happening right now that's affecting the jobs numbers. So look, let's take it as it is. Let's have this conversation on the basis that it's a real thing.
NELLIS: OK.
PHILLIP: We have more to discuss when we continue this conversation. We'll be back in just a moment.
[21:45:00]
(COMMERCIAL BREAK)
PHILLIP: As Americans head into the Labor Day holiday, they are facing the highest gas prices that we have seen on record.
According to CNN, the President's war with Iran isn't just the only thing that's driving up prices at the gas pump. Diesel is at the heart of the modern economy, it was also hit by an all-time high on Friday. Jet fuel costs have skyrocketed, leading airlines to hike airline -- airfare and baggage fees while cutting less-profitable flights.
[21:50:00]
So, this is the actual day-to-day what things cost reality for a lot of Americans. They're going on road trips this weekend. It's expensive. They're buying groceries. It's expensive. That cookout is going to cost a lot of money, this time around.
RODERICKA APPLEWHAITE, FORMER DIRECTOR OF BLACK MEDIA, BIDEN ADMIN., RAPID RESPONSE DIRECTOR, MAJORITY DEMOCRATS: Yes, it is, and it's -- all of this is very reminiscent of the conversations we would have in the Biden White House every first Friday of the month, where we've got this positive numbers. President Biden had positive jobs numbers month after month.
But Scott, I mean, you did a very good job of making the point that numbers on a spreadsheet aren't the same thing as what people are actually feeling when they're at the grocery store and when they're at the gas pump, and that's exactly what we're seeing now.
I mean, we can debate any economic metric we want. But at the end of the day, Americans are not feeling like this economy is getting better, and we are in an administration, in which the President said that on day one he's going to fix it. And then a couple months after that, JD Vance said, Well, be patient.
And now we're on year two of this, where people are feeling pinched and, to Mike's point, I mean, people are feeling like they have to get multiple jobs just to get by.
NELLIS: Yes.
APPLEWHAITE: 50 percent of Americans are very anxious and struggling to afford just gas and groceries.
SEAT: Yes.
APPLEWHAITE: So, what do you say to that? SEAT: Well, look, I will just point out what's happening in the State of Indiana, where I live. We have the lowest cost of gas per gallon in the entire country.
PHILLIP: Congratulations.
SEAT: And why is that? Well, it's because our governor, for five months now, has suspended the gas tax. And the reason he can do that is because of responsible Republican leadership that ensures that we have healthy and stable reserves.
Local governments are being made whole; they're not going to lose anything from this. So, that's the whole point of having a rainy day fund. It's the whole point of electing good people to office. Is so when these things happen, they can react. That doesn't happen in blue states where they're spendthrifts--
NELLIS: Well--
SEAT: --and just throwing money out the window all the time, and they can't make these decisions when the time comes.
SARIN: So, Pete, the thing that is sort of complicated about that is I think we all agree on the importance of electing good people. The challenge is you have a president who ran a presidential election on the idea of lowering prices on day one. Since coming into office, he has actively taken policies, things like tariffs, which are adding $1,100 to the cost that the average American family is paying, things like the war in Iran, which is adding several hundred dollars to the gas bills that the average American feels, such that people's wages are not actually keeping up with the price increases that they're experiencing in this economy, and they're frustrated.
And understandably, you can't just tell them, don't be frustrated or have a gas tax. You need policies--
JENNINGS: Well--
SARIN: --that are in the direction of promoting growth.
JENNINGS: But what you can tell them is, We cut your taxes. And every Democrat in the Congress voted against cutting taxes.
You seem to be concerned about policies that raise prices. Valid concern. In an election, you'll have a debate, and the debate between the Republicans and the Democrats on some of this affordability will be around taxation. Republicans don't just want to cut taxes; they did it, and Democrats, of course, voted against that and are currently proposing to overhaul our entire economic system, toss out capitalism--
PHILLIP: You know--
JENNINGS: --and install socialism, which means even more--
(CROSSTALK) PHILLIP: The only -- the only problem--
SARIN: --entire economic system--
JENNINGS: --expense in America. That's the debate we'll be having--
PHILLIP: The only problem with that argument is that tariffs are taxes.
NELLIS: Yes.
PHILLIP: And guess what the President talked about today? Tariffs.
NELLIS: More tariffs.
SARIN: Yes.
PHILLIP: Listen.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT, UNITED STATES OF AMERICA: All we have to do to cut our trade deficit with a country is not trade with them. Canada is won.
If we did no trading with Canada, we'd save $90 billion. And so what I'm saying, very simply, is that we should be paying the lowest interest rate in the world.
Now Canada would be in a heap of trouble. They would -- I don't think they'd exist. Because, again, they do 95 percent of their business with us.
(END VIDEO CLIP)
PHILLIP: So many problems there.
NELLIS: Yes.
PHILLIP: But I mean, just on a basic level, cutting trade with Canada is not going to help Americans.
NELLIS: Right. Well, and if you want to win a trade war, you need allies in order to do that. So immediately attacking Canada and Mexico was an incredibly stupid decision, in my opinion.
But I want to come back to what Scott said just a second ago: is these tariffs are the largest tax increase that the American people have experienced in a very long time, basically in decades. Well-documented here, including what you just said about it being $1,100 per year for the average American. It's making everything more expensive. Then you add this war in Iran, which is making gas, diesel, and so many other things more expensive. The administration is the one who's driving inflation right now.
And I understand, Pete, the point that you made about Indiana lowering its gas tax, suspending its gas tax. That's great.
I live in Chicago, just across the border. I agree--
SEAT: I'm sorry.
NELLIS: --I agree, my taxes are too high. But you know what? I don't live in Gary, Indiana right now, which hasn't had power for quite a while. So yes, Republican states have lower taxes, but they also have lower investment in public infrastructure, which means there are calamities like that that happen all the time. That's the double-edged sword of what happens between Democratic states and Republican states.
SEAT: Yes, I love that you brought up Gary, Indiana because there was a lot of coverage of that. But a neighboring community, Griffith, Indiana, also didn't have power for two weeks. No one talked about that. Another community next to that, Munster, Indiana, didn't have power for two weeks. No one talked about that. Why? Maybe, I don't know, 60 percent white in those communities.
[21:55:00]
PHILLIP: Well, I mean--
(CROSSTALK)
NELLIS: No one brought it up.
PHILLIP: Is that good--
NELLIS: No one brought it up--
SEAT: --not a single person. My parents were without power for nearly six days.
PHILLIP: But is that a good--
(CROSSTALK)
PHILLIP: I feel like that's making Mike's point at that--
(CROSSTALK)
PHILLIP: If it's -- I mean, you're making Mike's point that there is a disinvestment in infrastructure.
SEAT: No, the reason he's bringing up Gary is because they're trying to make it--
NELLIS: Gary is a significantly--
SEAT: --a racial argument.
NELLIS: No, no, no, Gary -- I didn't say anything about race. You're the one who brought it up.
APPLEWHAITE: Yes, you did-- NELLIS: Gary is a significantly larger town than the other two towns you just described.
SEAT: OK.
NELLIS: But my question to you is: You just hailed the governor of Indiana.
SEAT: Right.
NELLIS: What's the Governor of Indiana's plan to deal with the infrastructure problem? Because that's something that would not happen in Illinois.
SEAT: We have--
PHILLIP: Right.
SEAT: --we have been investing in infrastructure in ways that other states only dream they could do.
NELLIS: Well, I have power right now. A lot of people in Gary, Indiana still don't.
PHILLIP: All right, we're going to leave it there.
Coming up next for us. There's a new report that finds more and more Republican candidates do not want to campaign with President Trump. But the RNC is warning them that that would be a risky mistake. That's next.
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