• This is a rush transcript from "The Journal Editorial Report," February 21, 2009. This copy may not be in its final form and may be updated.

    PAUL GIGOT, FOX HOST: Up next on "The Journal Editorial Report," a closer look at the administration's $275 billion home foreclosure plan. Will it stem mortgage defaults or is it just buying time?

    And if you're worried about the ballooning federal debt, wait until you get a load of the states', where multi-billion dollar deficits could spell big trouble for taxpayers.

    Obama's Afghan surge. Is 17,000 more troops enough?

    "The Journal Editorial Report" begins right now.

    (BEGIN VIDEO CLIP)

    BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I want to be very clear about what this plan will not do. It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans. And it will not reward folks who bought homes they knew from the beginning they would not be able to afford.

    (END VIDEO CLIP)

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

    That was President Barack Obama unveiling a plan that he says will help between seven and nine million struggling homeowners avoid foreclosure. The president promised the $275 billion program would help families of that "played by the rules and acted irresponsibly." But will it?

    Joining the panel this week, Wall Street Journal columnist and deputy editor Dan Henninger; columnist Mary Anastasia O'Grady; editorial board member, Jason Riley; and senior economics writer, Steve Moore.

    Mary, there's no question, you're one of the struggling homeowners on the receiving end of this mortgage relief, it will help you. But is it going to help the larger economy?

    MARY ANASTASIA O'GRADY, COLUMNIST: Well, it helps you for a while anyway. What Obama's trying to do here is stop the downward spiral in home prices. He thinks that the home prices are the problem with the financial system and until you fix that problem, you cannot see the economy recovering.

    GIGOT: So fewer boarded up homes in neighborhoods.

    O'GRADY: Fewer foreclosures will mean stability, fewer failures in banks. The banks' assets will not be declining. Therefore, you'll stabilize the banks. They'll start lending again.

    GIGOT: Dan, is that logic sounding?

    DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Partly. I mean, some of these, like these — not these conforming loans that Freddie Mac held are going to be — principal will be paid down on some. That's a good thing. It will begin to stabilize the market.

    The problem, however, is that there is simply too much housing. There is a glut of housing. The easiest way is to think about ethanol or corn. If you had another commodity like that you would take the glut off the market and let prices drop. They're not going to do that in this instance. They're not going to reduce the housing stock.

    GIGOT: Jason?

    JASON RILEY, EDITORIAL BOARD MEMBER: Exactly. Nationwide, last year, foreclosures were up 81 percent from '07. That's what this plan is meant to address, that issue. That political issue, too, frankly. But as Dan said, you have a housing glut out there. You have too many people in homes they can't afford. And the market can't clear. And if we're going to subsidize them, continue to subsidize housing in this way, the market will not clear. That's the fundamental problem.