• This is a rush transcript from "The Journal Editorial Report," April 17, 2010. This copy may not be in its final form and may be updated.

    PAUL GIGOT, FOX HOST: This week on the "Journal Editorial Report," another showdown looms on Capitol Hill. Democrats look to financial reform legislation for their next big win. Republicans say the plan will lead to more bailouts, but can they block it?

    World leaders wrap up a nuclear security summit in Washington without any agreement on the biggest threat of all. When will they get serious about Iran?

    And a new governor takes on the teachers union in a battle to save the failed state of New Jersey. Can he win? and what others states can learn from his strategy.

    (BEGIN VIDEO CLIP)

    SENATE MINORITY LEADER REP. MITCH MCCONNELL, R-KY: If you look at it carefully, it will lead to endless taxpayer bailouts of Wall Street banks.

    TIM GEITHNER, TREASURY SECRETARY: We will not — let me say, we will not support a bill that there's risk. The central test of credibility on any too-big-to-fail is to make sure we can say that when large companies manage themself to the point where they can not survive without the government, that we put them out of the existence.

    (END VIDEO CLIP)

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

    Fresh off health care, there's a new battle being waged on Capitol Hill and Democrats hope it's their next big win, financial reform legislation. You just heard Senate Minority Leader Mitch McConnell argue that the Democrats' plan to overall the financial industry would encourage future bailouts, a claim the administration rejects. Who is right and who has the upper hand in the political fight ahead?

    Joining the panel this week, Wall Street Journal columnist and deputy editor, Dan Henninger; columnist, Mary Anastasia O'Grady; and assistant editorial page editor, James Freeman.

    James, you have heard conflicting claims. On the question of whether or not this bill makes bailouts more likely, who is right?

    JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: Well, this stuff gets complicated —

    (LAUGHTER)

    — so fortunately the American people — there's a nice shorthand test, if Treasury Secretary Tim Geithner is for the bill..

    (LAUGHTER)

    — that means you're probably going to have a lot of bailout authorities.

    GIGOT: Why do you say that?

    FREEMAN: You go back, really his whole career is orchestrating government bailouts. But more specifically starting in '08, with Bear Stearns and going forward, he's Mr. Bailout. He likes these emergency authorities to put foam on the runways, as it's called. So —

    GIGOT: He wants that flexibility in his back pocket because you never know when you need it. You're saying that flexibility —