• This is a rush transcript from "The Journal Editorial Report," January 1, 2011. This copy may not be in its final form and may be updated.

    PAUL GIGOT, HOST: This week, a special New Years edition of the "Journal Editorial Report." We'll take a look back at the biggest stories of 2010, as well as the winners and, of course, losers of the year that's passed.

    Plus, a look ahead to 2011. What stories will you be talking about? Which public figures will grab the headlines? Our panel is here with their predictions next.

    Welcome to this New Year's Day edition of the "Journal Editorial Report." I'm Paul Gigot.

    First up this week, a look back at the biggest stories of 2010 with our all-knowing and all-seeing panel, Wall Street Journal columnist and deputy editor, Dan Henninger; and editorial board members, Jason Riley, Dorothy Rabinowitz and Matt Kaminski.

    So, Dan, we'll start with you. What's your call for the big story of the year?

    DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Well, Paul, I think clearly the biggest story of the year November's off-year elections. And I don't think it was the biggest story because the Democrats were swept out and Republicans swept in. I think this was the beginning of a historic reform. Occasionally, the American people rise up and try to cleanse their system. And I think that the Tea Party was simply the leading edge of a huge wave that's sweeping not merely through Washington, but Sacramento, Albany, Trenton, Illinois. Congress' approval rating has fallen down below 20 percent. It's essentially a vote of no confidence in government.

    GIGOT: Right. But here's the thing, Dan. You're right. A historical repudiation, 63 seat House gain. The Republicans will have a bigger majority since anytime since 1946.

    HENNINGER: And down even to the state legislature.

    GIGOT: Yes, more than 700 state legislator seats. So it really was historic change. On the other hand, the Democrats say this is the greatest Congress in 50 years. Historic, they passed all of this great legislation. Explain that paradox.

    HENNINGER: Well, they passed Obamacare, which was the greatest entitlement since Medicare, and they didn't win the election. There has to be a certain degree of causality and connect the dots in America.

    GIGOT: They don't see the connection. So this historical change hasn't sunk in.

    (LAUGHTER)

    HENNINGER: They were standing on the beach and they said, look at the big wave coming. That's going to sweep us into office. It swept them out to sea. What more can they say.

    GIGOT: All right, Matt Kaminski, your biggest story?

    MATT KAMINSKI, EDITORIAL BOARD MEMBER: I would Dan's point and broaden it globally. The biggest story in the developed world this year was that we start out the year with the age of insolvency. Government everywhere was broke. In Greece you had rioting, the deficit was out of control with the country about to default. England had had a huge deficit too. But this has brought about the age of austerity. We've had incredibly deep cuts pushed through by new governments in Greece, in the U.K., in New Jersey, and —

    (LAUGHTER)

    GIGOT: And New Jersey.

    (LAUGHTER)

    KAMINSKI: In Asia and maybe California. We'll see.