• With: James Freeman, Dorothy Rabinowitz, Dan Henninger, Kim Strassel, Collin Levy

    This is a rush transcript from "Journal Editorial Report," January 14, 2012. This copy may not be in its final form and may be updated.

    PAUL GIGOT, HOST: This week on the "Journal Editorial Report," Republicans put capitalism on trial. Eager to unseat the frontrunner, Mitt Romney's rivals mount a blistering attack on his business past. How should Mitt Romney respond?

    Plus, the rise of the Super PACs. They're behind some of the most bruising ads of the campaign so far. Where do they come from and are they good for the political debate?

    And the first big labor fight of 2012 is taking shape in the Hoosier State. Why right-to-work may be right on target for Indiana's economy.

    (BEGIN VIDEO CLIP)

    MITT ROMNEY, R-FORMER MASSACHUSETTS GOVERNOR & PRESIDENTIAL CANDIDATE: President Obama wants to put free enterprise on trial. And the last few days, we have seen some desperate Republicans join forces with him.

    (BOOING)

    ROMNEY: This is such a mistake for our party and for our nation.

    (END VIDEO CLIP)

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

    That was Mitt Romney on Tuesday night, fresh off of his decisive victory in New Hampshire. The Republican frontrunner was referring to attacks by rivals Newt Gingrich and Rick Perry over his time at the private equity firm, Bain Capital. A group supporting the former House speaker has backed a 28-minute video and said they'll spend millions on ads in South Carolina portraying Mr. Romney as the Gordon Gekko of presidential politics.

    (BEGIN VIDEO CLIP)

    AD NARRATOR: A group of corporate raiders led by Mitt Romney. The company was Bain Capital, more ruthless than Wall Street.

    UNIDENTIFIED MALE: Pulled the rug out from under our plant.

    UNIDENTIFIED FEMALE: Everybody was fired. They fire people, they cut benefits, they sell assets.

    UNIDENTIFIED MALE: Mitt Romney, them guys, they don't care who I am.

    UNIDENTIFIED FEMALE: I feel that is the man that destroyed us.

    AD NARRATOR: Winning our Future is responsible for the content of this message.

    (END VIDEO CLIP)

    GIGOT: Joining the panel, this week, Wall Street Journal columnist and deputy editor, Dan Henninger; assistant editorial page editor, James Freeman; editorial board member, Dorothy Rabinowitz; and Washington columnist, Kim Strassel.

    James, you saw that ad, the king of Bain. Is that what private equity does?

    JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: That ad is a well- produced smear and so is the 28-minute film.

    (LAUGHTER)

    And I think, once Newt Gingrich quits and the PAC closes up shop, it will be able to sell it to the Obama campaign for a large amount of money.

    (LAUGHTER)

    (CROSSTALK)

    GIGOT: Well, but, is it -- is that what -- a fair description of the public/private equity business.

    FREEMAN: It is completely one-sided. And the point of private equity is to spot opportunities to make a profit. How do they make a profit? They see companies under performing, that could be made more efficient, and perhaps could go into new market, and what they try to do is make money by making those companies more profitable. And the real homerun ball is not just taking management fees and paying yourself dividends but also building an asset that you can sell to someone else.

    GIGOT: Let's get -- look at a comment by Rick Perry about this issue.

    (BEGIN VIDEO CLIP)

    RICK PERRY, R- GOVERNOR OF TEXAS & PRESIDENTIAL CANDIDATE: We need to have more venture capitalism going on in America and less vulture capitalism. The idea that you come in and you destroy people's lives, the idea that you come in just to make a quick profit, tear these companies apart. I understand restructuring. I understand those types of things. But the idea that we can't criticize someone for these get-rich-quick schemes is not appropriate from my perspective.

    (END VIDEO CLIP)

    GIGOT: Dorothy, get-rich-quick schemes, does he have a point is there something vultury about this -- these businesses?

    DOROTHY RABINOWITZ, EDITORIAL BOARD MEMBER: No. He doesn't -- let's all agree, these are horrendous displays --

    (LAUGHTER)

    -- of a war that equates of free markets with some sort of assault on human life and decency.

    Having said that, let me point out that there is something feverish about the response to these ads. Because, let us agree that there is something rumbling in this assault on these two outliers here. And that is, some problem having to do with the feeling about the likely nominee. And I think the uneasiness with Mitt Romney as the nominee is feeding into a lot of the sense of catastrophe and this sense that somehow they have been undone.

    GIGOT: So they focused on a weakness here --

    RABINOWITZ: Indeed.