• This is a rush transcript from "The Journal Editorial Report," August 2, 2008.

    PAUL GIGOT, HOST: This week on the "Journal Editorial Report," Obamanomics, 101. How much would the Democratic presidential candidate raise taxes? And what would it do to our weak economy?

    Plus, John McCain makes a tax mistake of his own. Would he really raise your payroll taxes?

    And another blow to the GOP as a senate legend is indicted in an ethics scandal. Could Democrats really pick up nine or 10 senate seats in November?

    The "Journal Editorial Report" begins right now.

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

    Fresh from his overseas tour, Democratic presidential candidate Barack Obama turned his attention to the U.S. economy this week, convening a panel that included billionaire businessman Warren Buffett, former Treasury Secretary Robert Rubin, and former Fed Chairman Paul Volcker. He also toured some battle ground states calling Republican economic policies reckless, and promoting relief for the middle class. But just what is he proposing? And what affect would his policies have on an already-weak economy?

    Here with a closer look at Obama's plan, Wall Street Journal columnist and deputy editor, Dan Henninger; columnist, Mary Anastasia O'Grady; opinionjournal.com columnist, John Fund, and economics writer, Steve Moore.

    Mary, let's start talking about what exactly Obama is proposing?

    MARY ANASTASIA O'GRADY, COLUMNIST: Obamanomics, if you can say that.

    GIGOT: I can barely say it.

    O'GRADY: Starts with an increase of the top marginal tax rate for income, goes from 35 percent up to 39.6 percent. If you add in a change in deductions, that takes you to 1.2 percent more and you are over 40 percent on the top marginal rate.

    GIGOT: All right, and then you throw in raising the capital gains tax rate which is now 15 percent.

    O'GRADY: Yes. He wants to take to it 28 percent.

    GIGOT : 25 or 28 percent.

    O'GRADY: Right.

    GIGOT: Then an increase also in the tax rated on dividends which is now 15 and could go also as high as maybe 28 percent.

    O'GRADY: Right. All in, that would take to you about 62 -- almost 63 percent, the top marginal rate.

    GIGOT: That's also if you include though Social Security, the payroll tax increase in addition because he's talking about something unusual.

    Right, Dan?