• This is a rush transcript from "The Journal Editorial Report," August 14, 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," a financial fix for the states. We'll talk about the congressional gift that keeps on giving to government workers. And at what cost to the poor?

    And we'll talk with New Jersey Governor Chris Christie. He's closing his state's deficit without raising taxes. And they said it couldn't be done.

    Plus, this city manager is set to take a pension worth tens of millions of dollars. And Californian's wonder why they have such a huge deficit.

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

    The House passed, and President Obama signed, a bill this week that would extend programs enacted in last year's economic stimulus package to help cash-strapped states avoid layoffs. It would give states $10 billion for education programs and $16 billion to help cover the Medicaid budgets in the first six months of next year.

    Democratic Congresswoman Rosa DeLauro of Connecticut, in voting for the bill, said, "This is a bitter pill to swallow. As you can imagine for me personally, it's like 'Sophie's Choice.'" You may remember that later made into a movie starring Meryl Streep, a story of a mother who is forced by the Nazis to choose between her two children. It has come to this — Congress comparing spending cuts to the Nazis.

    And joining the panel this week, Wall Street Journal columnist and deputy editor, Dan Henninger; Washington columnist, Kim Strassel; and editorial board member, Matt Kaminski.

    Kim, the Democrats got what they and passed the pill they want today pass. Why are they upset?

    KIM STRASSEL, WASHINGTON COLUMNIST: They're upset because it turns out even a ballooning federal government occasionally bumps up against its limits. And in this case, what is they wanted was to pass the $26 billion bailout, but with so many Republicans and even House Democrats, many blue dogs, concerned about the size of the deficit, there was a pushback, and said we're going to have to cut some other programs in order to pass this. One of the things they decided to cut was billions of dollars of aid for food stamp for the poor.

    GIGOT: Food stamps, wow.

    STRASSEL: Food stamps. What, in effect, Democrats did in passing this bailout is said, we are putting on our priority list, union workers, public employees, ahead of the poor who use food stamps.

    GIGOT: Wow, Matt, what's a good liberal to do?

    (LAUGHTER)

    You're supposed to— their whole moral reason for being is said to help redistribute income to the poor, to help them out. And here is the — they lose out to the other liberal priority.

    MATT KAMINSKI, EDITORIAL BOARD MEMBER: Well, it's a much bigger emergency session, there's a reason for this, and there's a reason why she called it an emergency, Nancy Pelosi, in bringing them back from the summer recess.

    (LAUGHTER)

    The emergency is the midterms.

    (LAUGHTER)

    Those are three months away and they need the union support. Most importantly, the sort of $10 billion, $26 billion, went to teachers, who are all unionized. And that money will — a lot will come back to Democrats this fall, in the form of campaign donations.