• This is a rush transcript from "The Journal Editorial Report," September 4, 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," facing a weak economic recovery and a revolt within their own party, Democratic leaders are scrambling to come up with their own tax cut plan, and fast. What's on the table?

    And Social Security scare tactics. It's a time honored campaign tradition. And this year, Democrats are counting on it to keep control of Congress. Will it work?

    Plus, unions are waging war on "The Los Angeles Times" after the newspaper publishes evaluations of thousands of that city's teachers. Is the data fair game?

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

    With the most sweeping tax cuts in a generation due to expire in January, a showdown is brewing, when lawmakers return to Capitol Hill from summer recess. Worried about the fragile economy and their own upcoming elections, a growing number of rank-and-file Democrats are joining the Republican opposition to President Obama's plans to let the Bush-era tax cuts expire, even for the wealthy. So can Democrat leaders keep a lid on the dissent or are they quietly planning a tax cut and maybe some more spending of their own?

    Joining the panel this week, Wall Street Journal columnist and deputy editor, Dan Henninger; opinionjournal.com columnist, John Fund; and senior economics writer, Steve Moore.

    So, Steve, how serious is this rank-and-file Democratic revolt against raising taxes?

    STEVE MOORE, SENIOR ECONOMICS WRITER: Well, it gets worse every week, Paul. And there's two reasons for that. Number one, the Democrats poll numbers keep going down week after week. And now they're in a bit of a political panic. And number two, we keep getting bad unemployment numbers. The new unemployment numbers this week show a continued increase in unemployment. Those two things have raised a lot of questions in Democrat's minds about the wisdom of raising taxes on anybody in 2011.

    And don't forget, Paul, when you said that this is tax increase on the wealthy, our statistics show that about 50 percent of that income will fall on the backs of small business employers who need to be doing the employing to get Americans back to work.

    GIGOT: I want to get into that debate, Steve.

    But, John, we have a situation where the revolt seems to be growing. Before the recess, we had Evan Bayh, Ben Nelson — a Senator of Indiana, Ben Nelson of Nebraska. Ken Conrad, of North Dakota, a committee chairman say, let's not raise taxes on — in January. Now you see this revolt spreading across the board. How serious do you think it is?

    JOHN FUND, OPINIONJOURNAL.COM COLUMNIST: Back in June, the White House told Democrats in Congress, don't worry, we have the summer of recovery tour. The summer of recovery tour became the summer of despair. Now Democrats are panicking. The White House has to do something.

    I talked to a Democratic congressman who was in a town hall meeting, who said, someone stood up at the town hall meeting and said, look, your economic plan isn't working. Are you going to do something now or are you going to wait until November 2 when we send you a real message.

    GIGOT: But they always thought, Dan, they could play a tax jujitsu, right?


    GIGOT: They'd say, we're going to remove — we're going to let the tax cuts continue, the lower tax rates, for the middle class. And we'll sock it to the wealthy. And that kind of class war would trump any economic message. Seems that's reversing.

    HENNINGER: Yes, it's kind of interesting we're having the discussion. I think it shows how disconnected the Democrats and the Democrats political professional class has become from the way that people live out there in the country. The Bush tax cuts were passed in 2001 and 2003. That was a long time ago. This set of tax regimes and rates is the status quo. It's what the country has been living with for a long time.

    GIGOT: It's not a really a tax cut. It's a tax —

    HENNINGER: Right.