• With: James Freeman, Dan Henninger, Dorothy Rabinowitz, Bret Stephens

    This is a rush transcript from "Journal Editorial Report," September 24, 2011. This copy may not be in its final form and may be updated.

    PAUL GIGOT, HOST: This week on the "Journal Editorial Report," the president's job pivot turns into a sharp left turn as he puts $1.5 trillion in tax hikes on the table. Even some Senate Democrats are skeptical. So, will any of it pass?

    Plus, Rick Perry, versus Mitt Romney, round three. Did either deal a knockout at this week's GOP debate?

    And is Obama losing the Jewish vote? And was his pro-Israel speech at the U.N. an attempt to win it back? There's a debate ahead.

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

    First came President Obama's $447 billion Jobs Act, loaded with new spending and temporary tax cuts. And then came his plan to pay for it. On Monday, he proposed $1.5 trillion in permanent tax hikes, including the so-called Buffett Rule, to raise taxes on Americans earning more than a million dollars a year.

    Joining the panel this week, Wall Street Journal columnist and deputy editor, Dan Henninger; editorial board member, Jason Riley; and assistant editorial page editor, James Freeman.

    So, James, we may be headed toward recession. We may already be in one.

    JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: Very slow growth.

    GIGOT: Very slow growth. Very slow jobs growth. The president wants to run on presumably his economic record, will have to. What's the strategy behind introducing this tax hike, about $1.5 trillion? How is that going to help?

    FREEMAN: It's kind of mind-boggling. And I think that's what investors around the world are looking at. We have a banking crisis in Europe. We have the consumer in Europe pulling back, the American consumer pulling back. Asia's economy, India and China, slowing down, and his answer is increased taxes. It really -- it defies political odds. I guess we're going to get to that. But on the economics, you don't see how this is a growth agenda and that's what we need.

    GIGOT: I guess they think that's because the tax cuts would only start in 2013, somehow, that wouldn't affect the economy now.

    FREEMAN: People would ignore the future and assume they live for today and pay big tax bills later, but who is go to invest when they know the taxes are coming down the pipe.

    GIGOT: Milton Freedman taught us that people invest based on their expectations.

    FREEMAN: Permanent income.

    GIGOT: Permanent income, yes.

    Dan?

    DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Well, the mistake you two are making is that --

    (LAUGHTER)

    GIGOT: Only one of many.

    (LAUGHTER)

    HENNINGER: You're trying to have a conversation about economics and this is not economics, it's social policy. All right? This is a wealth tax. It's like the wealth tax socialists passed in 1981. It was called the Solidarity Tax on Wealth.

    One of my favorite Obama documents is his February 2009, two months into his presidency, his economic statement to the president, and everything that he's saying now is it in that original statement. Millionaires and billionaires paying their fair share is in there. and we know that in the campaign, Obama said many times that he thought people in the upper brackets were absorbing too much of the nation's income and it was -- the middle class was suffering and this had been going for 10 years.

    His idea is to reprogram all of this wealth back down into what he describes as the middle class. It's a social policy. Just as he spent a year fighting for his health care law, I think he's willing to spend political capital, to achieve these wealth taxes on the assumption -- and we'll get into the debate later -- that looking at the array of Republican candidates running against him, he could win next year.

    JASON RILEY, EDITORIAL BOARD MEMBER: The election maybe 14 months away, but our president is in full campaign mode now. And I don't think this has anything to do with economics. I think it has to do with politics. He's looking at the polls out there.

    GIGOT: Who is he trying to appeal to, Jason?

    RILEY: Two people, the base -- the two sets, I should say, of voters, the base, which believe in wealth distribution, and also Independent voters. There are a couple of polls out there, one by CNN and one by Gallup. Both said more than 60 percent of Independent voters think we should reduce the deficit by raising taxes on the wealthy and corporations. Obama thinks he can appeal to those Independent voters. Those are the people that brought him over the top in '08 and bring them back into the Democratic Party.

    GIGOT: But Independent voters say, above all, they care about jobs and economic growth.

    (CROSSTALK)

    JASON: And spending.

    GIGOT: And if the economy isn't growing, I mean, an appeal to a wealth tax isn't going to make them feel any better about Obama's economic management, is it?

    RILEY: I don't think it is either and I don't think the strategy will work. I think the independent voters care more about spending than raising taxes on the wealthy.

    GIGOT: James, let's talk about the political reaction to this in the president's own party.

    FREEMAN: It's been weird, because I think if you're setting up for a political play, normally you would expect him to call, let's say Harry Reid, and perhaps brings some Democrats to the White House and say, what are the five things we can put into a package that all of the Democratic Senate Caucus could go for but Republicans will not want to vote against, but we'll make them, and put them in a tough spot going to in an election year. I guess this conversation never happened.

    (LAUGHTER)

    FREEMAN: It makes you -- people have question how much --

    (CROSSTALK)

    GIGOT: But Democrats are emerging --

    (CROSSTALK)