Transcript: 'The Journal Editorial Report,' January 6, 2007

This is a rush transcript from "The Journal Editorial Report," January 6, 2006.

PAUL GIGOT, FOX HOST: This week on the "Journal Editorial Report," the 110th Congress convenes with Democrats at the helm. Ethics reform is topping the agenda. But will Congress really cleanup its act?

Plus, from stem-cell research to price controls on prescription drugs, we'll take a look at Speaker Pelosi's plans.

And with a passel of poll-friendly measures dominating the Democrats' first 100 hours, can President Bush keep his own party in line?

Those topics and our weekly "Hits and Misses," but first, these headlines.

(NEWSBREAK)

GIGOT: Welcome to the "Journal Editorial Report." I'm Paul Gigot.

The 110th Congress was sworn in this week giving Democrats control of both chambers for the first time in 12 years and setting the stage for the new majority to tackle a host of issues, including earmarks and ethics reform.

Tennessee Congressman Jim Cooper is policy co-chair of the Blue Dog Coalition, a group of conservative House Democrats, whose ranks swelled to 44 in the November elections. He joins me now from Capitol Hill.

Congressman, welcome.

REP. JIM COOPER, D-TENN.: Thank you, Paul. Good to be with you.

GIGOT: You've got a big new chunk of votes. You are no longer in the minority. What's your advice to your leadership from your coalition saying they need to accomplish this Congress?

COOPER: Well, I think we are off to a good start. I think Americans want us to begin with ethics reform. This is a good beginning to cure an age-old problem. We need to turn the page away from Tom DeLay, Duke Cunningham, Bob Ney and all the other scandals that afflicted the past Congress.

But there is a lot more we need to do. The budget is clearly out of control. Some of our strongest Republican friends recognize that. And the folks at the Heritage Foundation, the Cato Institute know that Bush has turned out to be one of the biggest spending presidents since Lyndon Baines Johnson. And that's quite a record.

So there is a lot that we need to do. Now, the Democrats have a big agenda. But it's going to be tough to fit it within these pay-go rules.

GIGOT: Let's talk about these earmarks because that was a big criticism — and a lot of people had, you had, we had — of the Republicans in Congress. But you have some chairmen coming in who were not pikers when it came to passing earmarks themselves, some of the old liberal bulls. How do you — going to rein them in on earmarking?

COOPER: Well, Paul, you have been around a long time too. We didn't used to have earmarks like we have today. The Republicans have largely created this monster. And Bush's failure to veto a single spending bill or to rescind any spending has allowed the earmark practice to flourish.

So I think you're going to see great restraint. I credit Democratic leaders Dave Obey and Bob Byrd for essentially freezing government spending for 2007.

They faced a choice. They could have passed the Republican bills. But chose to keep on a continuing resolution basis. So that's the greatest step forward toward curbing earmarks. Basically, for 2007, we eliminated all of them. And that's one of the greatest reforms undertaken by a Congress.

GIGOT: But you are not saying that you're going to eliminate earmarks all together are you? That would be a great step forward. But is that possible?

COOPER: Well, we've done it for 2007 already. We are going to have to see what happens in 2008. The question will be, after this period of fasting, do we go on a sensible diet, as I hope that we will, or will we indulge in binge eating? And I'm afraid that the more likely outcome because both parties, Democrats and Republicans, have fallen in love with earmarks.

GIGOT: Let's talk about the budget. You have been a deficit hawk. You want to get the budget deficit balanced. Do you think can you do that — the Democrats can do that only by limiting the growth of spending? Or do you think the tax increases have to be on the table to balance the budget?

COOPER: Well, my first, second and third choices are to work on the spending side. I don't think any taxpayer thinks that government is efficient. There are a thousand things we need to do to clean up and make government efficient. So I hope we will begin there.

And it's going to be tough. A lot of folks in the Democratic Party are not used to governing. They are more accustomed to complaining these last 12 years. But there are enough of us left, I think, who know that tough decisions need to be made.

And the American people will ultimately reward the party that governs in a sensible fashion. Two thousand and eight is not far away; those elections coming up. It's going to be a tough presidential year.

And my mantra is good policy is good politics. So I hope we will do the right thing.

GIGOT: Well, the president this week, in the op-ed in the "Journal," said that — it defended his tax cuts. And he even said he wants to make them permanent. Of course, you know they expire in 2010, which is not that far ahead. Are you in favor of voting to make those permanent?

COOPER: Let's see what the president's budget says. The president talks a good game. But, as I mentioned earlier, he has been the largest spending president since LBJ. And that's even if you exclude all the war costs and things like that.

So we need a more realistic assessment of our budget matters in Washington. I have been pushing the Treasury Department Report, which uses actual business accrual accounting. And it tells us that the deficit is many times larger than the president will admit.

President Bush is the first MBA president in America history. He is uniquely trained to tell the American people the truth about our budget deficits using real accounting. And, yet, he's failed to do that. He's failed to veto a single bill, except the stem cell bill, which had nothing to do with spending.

It is an amazing period of Republican laxity on fiscal responsibility. We need to return to basics, return to fiscal discipline. And I hope President Bush will have a change of heart and start doing that.

GIGOT: Let me ask you one question about process. You know, there is a lot of complaints in your party about Tom Delay muscling bills through the House. But this week, the Democrats basically trying to rush things this week and next in 100 hours, all kind of bills without consulting Republicans or without having committee hearings. Was that a good idea?

COOPER: Paul, give us a little break on this one. The American people knew the Six for '06 agenda was what the Democrats were running on. We won a resounding victory. And I think that you will see the most open and fair Congress that we've seen in decades under the leadership of Speaker Pelosi.

But on these six issues, the American people have spoken. And I think that we should listen to them.

We promised we would do this in 100 hours. The Republicans would love to have us to debate this for 100 hours and get nothing done. We will deliver this package. It is widely and bipartisanly popular. So I think, with this one exception, you're going to the most open and fair Congress in history.

GIGOT: All right, Congressman. Thanks again for being here. We will be watching.

COOPER: Thank you, Paul.

GIGOT: When we come back, the Pelosi agenda, from a minimum wage hike to price controls on prescription drugs. We'll take an in depth look at what Democrats plan to push through in their first days in power.

Plus, can President Bush keep members of his own party in line on such volatile issues as stem cell research? Our panel weighs in on those topics, and our "Hits and Misses" of the week when the "Journal Editorial Report" continues.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Therefore, the Honorable Nancy Pelosi, of the state of California, is duly elected Speaker of the House of Representatives for the 110th Congress, having received the majority of the votes cast.

(END VIDEO CLIP)

GIGOT: Congresswoman Nancy Pelosi was sworn in this week as the nation's first female House Speaker, promising to push through a pile of poll-friendly measures in the Democrats' much-hyped first 100 hours.

Joining the panel this week, "Wall Street Journal" Columnist and Deputy Editor Dan Henninger, as well as Kim Strassel and Steve Moore, both "Wall Street Journal" editorial board members.

Kim, you heard Jim Cooper talk about the fiscal policy. It sounded to me like he thinks that the Democrats can get to the right of the Republicans on spending and fiscal issues. Can they do it?

KIM STRASSEL, WSJ EDITORIAL BOARD MEMBER: Well, It is not like the Republicans have made it very hard for them to get to the right. Most of what Congressman Cooper said was correct about this presidency and the previous congress — Republican Congress having been very profligate in spending.

And this was what made it a little — the irony of President Bush's speech a couple days ago saying that he really was now calling for fiscal responsibility. He wants a line-item veto. He wants to cut earmarks in half. These were things that were not very high on the agenda when the Republicans were there, in particular, the earmarks question.

GIGOT: He didn't want to reduce earmarks for Republicans because that meant challenging Denny Hastert and his own party. And they were some of the biggest earmarkers. He didn't want to do it. Now, it's easier with Democrats in control.

STEVE MOORE, WSJ EDITORIAL BOARD MEMBER: Yes. Yes, as Kim said, the Republicans have lowered the bar so much it's so easy for the Democrats to leap over it. On earmarks, just as an example, the bridge to nowhere in Alaska and all these projects we made so much fun of. There were something like 15,000 of these earmarks in the 2005 appropriations bill.

So even if Democrats only have 10,000 of these earmarks, they can still say we cut it by one-third over where the Republicans were.

STRASSEL: There is even a bigger danger here, though, too, because Republicans have been so profligate. The Democrats are going to hide behind fiscal responsibility. And that's going to give them the opening to do things that the Republican really don't want to happen.

They are talking about enacting pay-go rules, for instance.

GIGOT: Pay-as-you-go rules.

STRASSEL: Pay-as-you-go-rules, which really is a way to set the field for them to raise taxes in the future.

GIGOT: What about this issue of ethics reform. How real is some of this stuff? Because a lot of rules they are imposing aren't so much restrictions on members of Congress, they're restrictions on what lobbyists can do. And the last time I checked the First Amendment, you had the right to petition your government.

HENNINGER: Yes. They have an incredible skill at deflecting ethics onto somebody. It's not our fault, we innocents in Congress. We are being lead astray by the horrible lobbyists.

GIGOT: Yes. These are both parties.

HENNINGER: And these are both parties doing this. I think that it is a kind of reflection of community standards in Washington. They have been through this sort of ethical swamp. And now, they have got to drain the swamp and go back. Eventually, it will be back to business as usual.

I think — you know, I kind of like the idea that you take these cases, these instances on a case-by-case basis. William Jefferson, for instance, the idea that you just publicly expose and humiliate an individual like that when they come up, rather than expecting some sort of systematic...

GIGOT: He's a Democrat from Louisiana...

HENNINGER: He's a Democrat.

GIGOT: ... under investigation by the FBI.

HENNINGER: Who was found with $90,000 in cash in his office freezer.

GIGOT: Home freezer.

STRASSEL: Home freezer.

MOORE: There is one other really bad idea in what they call the Six for '06 agenda. And that is these price controls on the drug companies. This is really dangerous stuff because what you are talking about is basically taking — sweating a lot of the profit out of making new drugs for diseases like cancer and heart disease and multiple sclerosis.

And this, I think, could be very controversial. Because, if you're going to take the profit out of it, companies won't make the drugs. And where is, say, Michael J. Fox on that? He made great hay out of the issue of stem cell research. But putting price controls on the drug companies could have a more negative effect.

HENNINGER: And, Steve, in 15 seconds has expressed why you should have congressional hearings on this subject rather than whomping it through in 100 hours, as they are purporting to do. That should not be allowed to happen.

STRASSEL: Well, Republicans are going to have to walk a fine line here because they are very conflicted at the movement. They don't want to be seen as being totally obstructionist the way the Democrats have. A lot of them think that might be a bad strategy.

So they are looking at these six different items with the Democrats and saying, what can we go along with. Are you are going to see some of them with — they're probably going to go along with minimum wage. They are probably going to go along with stem-cell research.

GIGOT: OK, Kim, hold that thought. We will get back to that in a second.

As President Bush faces an opposition Congress for the first time, can he keep members of his own party in line? That, and our "Hits and Misses" of the week, when the "Journal Editorial Report" continues.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The Congress has changed. Our obligations to the country haven't changed. We've all been entrusted with public office at a momentous time in our nation's history. And together, we have important things to do. It is time to set aside politics and focus on the future.

(END VIDEO CLIP)

GIGOT: That was President Bush earlier this week calling for bipartisanship as he faces a Democratic controlled legislature for the first time.

In an op-ed piece on our pages Wednesday, the president provided a first glimpse at how he intended to deal with the new Congress.

Dan, you read that op-ed piece by the president. What message was he trying to sending the members of Congress?

HENNINGER: Well, I think he was trying to send a message that he ought to be proud of. And that is that what he would like to see at the center of the agenda is economic growth.

Over in Congress, and in Washington generally, they think of the world wholly in terms of the federal budget. Tax policy is about gaining or losing money to do things that are in the federal budget.

What Bush is trying to suggest is, no, guys, the world is about the economy out there — people's jobs, creating new jobs. And he has had a strong record.

And the record in large part has been based on his tax cuts. The revenue feedbacks from the tax cuts have been huge. The deficit has fallen $165 billion in the last two years. I think that is the thing that he has to emphasize — economic growth.

MOORE: You know, Dan, in addition to that, I really think that, if you look at Bush and compare it with what happened with Bill Clinton when Newt Gingrich took over, Bush has this opportunity now to really revive his presidency and to use Nancy Pelosi as a foil to challenge them on issues like the tax issues, on the minimum wage, which we think is a mistake.

At least he should say, look, if we're going to do the minimum wage, we've got to provide relief for small businesses. We have to have an exemption for teenagers, for gosh sakes. So those kinds of things, I think, he can really position himself sort of in a centrist position and move the Democrats to the left.

GIGOT: But, Steve, you've been very concerned that the president was willing to consider tax increases as part of some kind of larger entitlement reform for Social Security. And yet, this week, in that op-ed, the President said this is not the time to raise taxes.

MOORE: He is listening to us, I think.

GIGOT: But did he reassure you, do you think, in fact, taxes are off the table?

MOORE: The message from the White House this week...

GIGOT: As opposed to last week.

MOORE: ... is no new taxes. And he has to do this. And I do think the one thing that really would ruin this presidency would be if he moved to the left on taxes. Because you're exactly right, Dan. This is his one signal achievement.

GIGOT: The president said something interesting as well in the op-ed, Kim, which is that, when you have a sizable minority in Congress, as Republicans now have — 49 seats in the Senate, for example — they have the opportunity to shape legislation. But that means Republicans are going to have to have some kind of unity.

Is the president going to be able to maintain that unity? Or are you going to see Republicans head for the hills so they don't vote against popular items like the minimum wage or lower prices for drugs, that sort of thing?

STRASSEL: I think we're going to get an early test case on this next week. They're going to bring up the stem cell bill again. This was a bill that passed both houses last year. And then, the president vetoed it.

GIGOT: It calls for federal funding for stem cell research on embryos — on new embryos.

STRASSEL: Yes. And this is something that's part of the Democrat's 6 in '06. And it's going to get passed probably in both houses without any question.

The question is whether or not the president, especially in the Senate, is going to be able to keep his party together to continue, not override the veto.

GIGOT: And what do you think's going to happen?

STRASSEL: It's going to be really close. It's going to come down to one vote or two. And if they all head for the hills on this one, then there's going to be probably a lot of mayhem in the up coming months.

GIGOT: I sense some intellectual confusion, Steve, on the part of Republicans. They don't know really quite know what they stand for, for sure. And a lot them, I bet you, are going to go with the Democrats on some of these early votes.

MOORE: That's right. Kim is right. The stem cell vote is one to watch. But also, I would say, what happens with Republican votes on the minimum wage. I mean, my goodness, if this is a pro-free market policy and pro-free enterprise policy, then certainly they should be against wage and price controls. So let's see how many defections there are on that. I would say that...

STRASSEL: And the excuses for when they do that.

MOORE: If Republicans stick to their guns on taxes, promote making Bush's tax cuts permanent and say, look, we're all in favor of balancing the budget in five years, but let's do it on the spending side.

HENNINGER: Bush had another thing in that article that he wrote for us. He said he would like a line item veto. Now, he's probably not going to get it. But if you paired the line item veto with earmark reform, more disclosure, you would actually have something pretty effective. So the Republicans at least ought to insist on something that would make a reform like this real rather than a facade.

GIGOT: Very quickly, Dan, how many of this legislation that the Democrats are going to pass in 100 hours is going to get through the Senate?

HENNINGER: I would say maybe the minimum wage, maybe the educational subsidies. I think the rest is going to be challenged.

GIGOT: And particularly the drug price controls. That's just not...

HENNINGER: The drug price controls. And the stem cells could be very controversial.

GIGOT: All right.

We have to take one more break. When we come back, our "Hits and Misses" of the week.

(COMMERCIAL BREAK)

GIGOT: Winners and losers, picks and pans, Hits and Misses," it's our way of calling attention to the best and the worst of the week.

Item 1, caution, reading all those beauty magazines may be harmful to teen girls' health — Dan?

HENNINGER: Yes, this is a miss. The magazine "The Journal of Pediatrians — Pediatrics" reported in January that reading diet articles could be unhealthy. They've literally proven that girls read these articles about lose-40-pounds-now, turn into tremendously unhealthy behavior, starving themselves, bulimia and things like that.

The Metropolitan Transit Authority in New York City also reported this week that the number one reason for delayed trains is people fainting from their diet.

(LAUGHING)

Now, we're turning into a nation of crazy people. You read this stuff and you go nuts.

Now, Starbucks just announced this week that they're going to take trans fats out of their foods because we're worried it's going to us. Global warming is going to kill us.

I've got advice to parents. What you should tell your children is study psychology because this is going to be a boom business treating all the nuts in our country.

GIGOT: All right, Dan.

Next, a begrudging hit to the Massachusetts State Legislature — Kim?

STRASSEL: Yes. It turns out there actually is something worse than a politician. That's a politician who doesn't do his job.

As the poor voters of Massachusetts recently found out when, three years after their Supreme Court imposed gay marriage on the state, they decided they wanted a say. They collected an unprecedented number of signatures and went to put it on the 2008 ballot.

Only problem is, in Massachusetts, the legislature has to agree to put an initiative on the ballot. And the wise Massachusetts politicians didn't think the mere rabble in Massachusetts should get to say anything on it. So they wouldn't hold a vote.

Now, it turns out they were ultimately shamed into doing so. This week they did. So a very begrudging and belated hit for them for finally doing something that earned their paycheck.

GIGOT: All right. Thanks, Kim.

Finally, Steve, playing politic with polar bears.

MOORE: Yes, environmental groups for years have been pressuring President Bush to put the polar bear on the endangered species list. President Bush this week said that he would spend a year investigating that.

Now, you would think, if you were going to put a species on the threatened list, that we're having few them, not more of them. But, in fact, the sources that I've talked to, who know about wildlife in the arctic region, are saying, in fact, that the number of polar bears has actually doubled over the last three decades. And so you're actually seeing, in many areas, record numbers of polar bears. And, in fact, in some areas, they are overly abundant.

What I think this suggests is two things about the global warming debate. Number one is that we continually put politics over science. And number two, what's really melting in this debate, it's not so much the polar ice caps, but rather the truth.

GIGOT: All right, Steve, thanks.

That's it for this week's edition of the "Journal Editorial Report."

Thanks to Dan Henninger, Kim Strassel and Steve Moore.

I'm Paul Gigot. Thanks to all of you for watching. We hope to see you right here next week.

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