• This is a rush transcript from "The Journal Editorial Report," August 28, 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," so what ever happened to the summer of recovery? Worries about the economy deepen as home sales plummet, consumer confidence flags and unemployment remains high. Are we headed toward a double-dip recession?

    And an Alaskan Tea Party. What Republicans can learn from Lisa Murkowski. And a look ahead to what is shaping up to be November's hottest race.

    Plus, the next front in the battle over immigration. Should babies born to illegal aliens be denied citizenship?


    VICE PRESIDENT JOE BIDEN: Returning this great ship of state around that was wandering out to sea and it's heading back to port. Look, it is not happening as fast as anyone would like and certainly not fast enough for millions of folks still out of work. But there isn't any doubt we are moving in the right direction.


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

    And that was Vice President Joe Biden this week putting a decidedly happy spin on what he previously called the summer of recovery and insisting that the economy is moving in the right direction. But it's proving to be a tough sell. The unemployment rate is lingering at 9.5 percent. Consumer confidence is continuing its slide. And sales of existing homes drop by 27 percent in July to their lowest level in more than a decade.

    Joining the panel this week, Wall Street Journal columnist Mary Anastasia O'Grady; assistant editorial page editor James Freeman; and senior economics writer Steve Moore.

    Steve, on Friday, the second-quarter growth numbers revised downward from 2.4 percent to 1.6 percent. How worried are you that this is going to be a double dip or is this a temporary deceleration?

    STEVE MOORE, SENIOR ECONOMICS WRITER: Paul, I am very worried about it. I have to say in response to what Joe Biden said, I don't think many Democrats will want Joe Biden in their district come this campaign season.

    GIGOT: No.

    MOORE: This is a guy who, just yesterday, was saying the big triumph of the stimulus plan was they've weatherized 200,000 homes. That is not bringing unemployment down. I'm very worried, Paul.

    And I think the central problem is, even if you believe in this idea of a Keynesian stimulus, with that trillion dollars or so we spent over the last year and a half, what happens when the money runs out? And the money is running out. There is no second act from this administration or plan B as the economy decelerates.

    GIGOT: What is the cause, Mary? What do you think is the problem? We threw all this monetary stimulus through low interest rates, all of the fiscal stimulus, special programs, tax credits and what not. And we are still stumbling along. That is a problem.

    MARY ANASTASIA O'GRADY, COLUMNIST: Yes, I think that is the problem.

    GIGOT: The government stimulus and all that is the problem?

    O'GRADY: No, the fact that the government has thrown all of these things at the wall, none of which have done something, is making it worse. People are realizing there is nothing left for them to do. If all of these things that were promise to give prosperity again have failed, what can be done? I think that uncertainty has paralyzed people. There is a lot of cash lying around. Corporations are famously flush with money.

    GIGOT: $2 trillion my most estimates.