• With: Dan Henninger, Mary Anastasia O'Grady, James Freeman, Kim Strassel

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

    STUART VARNEY, FOX HOST: This week on the "Journal Editorial Report," taxing the rich. President Obama says it's only fair. His "Buffett rule" may be good politics, but is it bad policy?

    And weekly job numbers. Payday bleak employment picture. Is it a bump in the road or is the economic recovery headed off a cliff?

    And with his chief Republican rival out, Mitt Romney looks to the general election. What he needs to do to take on the president and win.


    BARACK OBAMA, PRESIDENT OF THE UNITED STATES: What Ronald Reagan was calling for then is the same thing we're calling for now, a return to basic fairness and responsibility, everybody doing their part.


    VARNEY: Welcome to the "Journal Editorial Report." I'm Stuart Varney, in this week for Paul Gigot.

    Well, you just heard President Obama invoking Ronald Reagan, and claiming that his latest plan to tax the rich is all about fairness. The president officially endorsed the so-called "Buffett rule" in the swing state of Florida Tuesday, calling for a minimum 30 percent tax on those making more than a million dollars a year. His campaign clearly thinks it is a political winner, but is it good policy?

    Let's ask Wall Street Journal columnist and deputy editor, Dan Henninger; columnist, Mary Anastasia O'Grady; assistant editorial page editor, James Freeman; and Washington columnist, Kim Strassel.

    Dan, to you first. I call this class warfare.


    VARNEY: I know something about that. Is this a winning political strategy?

    HENNINGER: Let's put it this way, Stuart, invoking Ronald Reagan in this context really takes the cake. We'll get to that later. But bear in mind that the first time around with the Obama rule, it wasn't about basic fairness. It was about reducing the deficit. As the president said, it's simple math. Well, somebody did the arithmetic, and it turns out, it adds up to about $5 billion a year, a teardrop in denting the deficit. Then we shifted to basic fairness.

    I think the problem with that is he's running in a way that induces resentment on the part of some voters. I don't think most people carry resentment and fairness in their head all the time, but he's going to have to sustain that by giving these class warfare speeches. While it may work, I don't think it's a winning strategy. I don't think he can build a majority on that basis. Some people will respond, but I don't think enough.

    VARNEY: Kim, I want to stay with the political angle for a second. In America, does class warfare win?

    KIM STRASSEL, WASHINGTON COLUMNIST: Well, look, the president's doing this for two reasons. One is because he just doesn't have anything else to run on. The economy's not great. His record is not strong. He's also doing it because he views this as a weak spot for Mitt Romney, who is a bit sensitive about his own wealth. The problem is if you ask Americans in the abstract, do they think millionaires and billionaires should pay more, they say yes. More interesting, though, are the polls that say, what do you think is the most important issue? They do not believe this is the most important issue. They want a president who's going to tell them how he's going to fix the economy, what he's going to do fix the deficit. So the question is, do you motivate people to go to the polls on this issue? Can you win as a president running on higher taxes? That's a bigger gamble.

    VARNEY: Which brings us to the question of whether or not this is good economic policy.

    But look, the premise of the president's position is that this is fair, this is fairness. Is it, Mary?

    MARY ANASTASIA O'GRADY, COLUMNIST: Well, if the question is paying your fair share, it certainly is not. I mean, the top 1 percent of earners in this country already pay about 40 percent of the taxes. The top 5 percent pay almost 60 percent of the taxes. And the bottom 50 percent pay less than 3 percent of the taxes. So if it's about paying your fair share, that's already happening. What the president is doing here is getting at something else, which is very common in Latin America, equality. He wants everybody to be equal. He thinks that that's a resounding message to the American voter. I don't think it is.

    VARNEY: James?

    JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: Well, just to clarify, this is not what Ronald Reagan was calling for.

    VARNEY: Thank you.

    FREEMAN: Amazing. This week, the White House using the 1986 tax reform as somehow connecting it to the "Buffett rule" -- the '86 tax reform under Reagan was cutting rates, lower deductions, simplifying taxes. What President Obama is proposing here, no elimination of deductions, no simplification, no rate cuts, increasing taxes on capital gains. So it's really the exact opposite. I think you have to wonder, good policy, is it a growth strategy to say we are going to tax equity investment more?

    VARNEY: In your judgment, is it good economic policy?


    FREEMAN: It can't be. We're sitting here with all these nervous investors, scared companies, individuals sitting on cash, investing in long-term treasury bonds instead of taking risks. This is an arrow right at that risk-taking to say we'll make it more expensive to invest in equities.

    HENNINGER: Yes, and to James' point, what's so fascinating about the president's presentation, especially invoking Reagan, is he himself does not even talk about the growth aspects of this tax policy. Did anyone hear him talking about how his tax policy was going to promote economic growth? Reagan did it all the time. Barack Obama isn't even talking about that, which is obviously the primary issue in the center of the campaign. It's really kind of amazing that he doesn't somehow try to make a case for how this is going to improve the economy.

    VARNEY: Kim, I think it's going to be voted on next week in the Senate. How much Democrat support will it get?

    STRASSEL: Well, they have brought this issue up several times in the Senate before. It's never actually passed. I think you touch on another risk for Democrats. Senate majority leader, Harry Reid, is starting to get a real reputation of overseeing a graveyard. There are growing complaints that the House Republicans have passed dozens of pieces of legislation. There are even bills that President Barack Obama says he supports, that Senate Democrats support, but Harry Reid has had no time to debate any of those or bring them to the floor, because they're holding show votes like this, legislation that's not going to pass, but is all designed for the political campaign this fall.

    VARNEY: All designed for the political campaign this fall. I have to keep going back to that question. Does class warfare win politically in America? I understand that in the past it has not. This year, Kim, do you think it's a winning issue, politically?

    STRASSEL: I don't. They're going to try, again, because they don't have much else. The only way they might win this is if Mitt Romney does not actually respond on this. This is the president drawing a line in the sand, saying this is what we are going to fight over. If Mitt Romney decides to agree with him and continues saying things like, well, the rich can take care of themselves, he sees that issue. He has to go out and make the argument that lower tax rates for all are what create jobs and economic growth. If he can't do that, then the Republicans have a problem.

    O'GRADY: You know, I think Kim is absolutely right on that. This is an opportunity for Romney. I mean, here is a president, going after the single most important group of people who can create jobs, who can give us capital formation, who can give us growth, and Romney has to make that very clear, because if the president just sails through on this resentment issue, I think it's going to be very tough.

    VARNEY: Last word.

    FREEMAN: You can't hit the "Buffett rule." It's a political sham. It doesn't raise money. Warren Buffett is not going to be affected by it, because he has bragged by shielding his wealth from capital gains taxes. It's not even going to hit Buffett that hard.

    VARNEY: I want the last word --


    -- class warfare does not work in America.