• This is a rush transcript from "The Journal Editorial Report," February 10, 2007.

    PAUL GIGOT, HOST: This week on the "Journal Editorial Report":




    GIGOT: Rudy Giuliani comes one step closer to a presidential run. But how will the former New York City mayor's social views play with cultural conservatives in the South and West?

    Plus, a looming fiscal showdown, the president vows to balance the budget without a tax increase. But Democrats say something's got to give.

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


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

    Former New York City Mayor Rudy Giuliani moved closer this week to a run for the Republican presidential nomination, filing papers with the Federal Election Commission, and telling FOX News that he's in it to win.


    GIULIANI: I've no idea who's going to get the nomination. But you do this because you believe that you can win the nomination of your party. And then you believe that you are the strongest candidate to win the election for your party. GIGOT: Fred Siegel is a former Giuliani campaign advisor and author of "The Prince of the City: Giuliani in New York and the Genius of American Life."

    Fred Siegel, welcome.

    FRED SIEGEL, AUTHOR, "THE PRINCE OF THE CITY": Thanks for having me.

    GIGOT: You watched Rudy Giuliani as mayor here. Now, we all know about his performance after 9/11. But what else did he accomplish in that office that recommends him for the White House?

    SIEGEL: Well, it's little known, but when he came into office, one out of every seven New Yorkers, 1.1 million people, were on welfare. Now, this is significant not only because welfare itself was a problem. It's because when he came into office, New York was bankrupt. It was technically bankrupt.

    And he pulled New York back from bankruptcy, partly through welfare reform, partly through cuts, partly through some privatizations. And the fiscal accomplishments in his first term were enormous, but not widely known.

    GIGOT: Some people say in the second term, though, he let that get away, not on welfare, but on the fiscal side, where he started to spend a lot and left his successor, Mike Bloomberg, with a deficit.

    SIEGEL: He did. I think he loosened the reins in the second term. He wasn't — he wasn't the fiscal manager then that he had been in the first term.