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

    This is a rush transcript from "Journal Editorial Report," July 7, 2012. This copy may not be in its final form and may be updated.

    DAVID ASMAN, GUEST HOST: This week on the "Journal Editorial Report," Mitt Romney's tax confusion. Did he bungle his response on the ObamaCare mandate? Is it a sign of bigger campaign problems?

    Also, President Obama swinging through some battleground states, doubling down on accusations that Mitt Romney outsourced jobs. The charges may be questionable, but are they working?

    Also, weak job growth coupled with the worst manufacturing numbers in three years has some economists worried. Are we headed into another recession?

    Welcome to the "Journal Editorial Report." I'm David Asman, in this week for Paul Gigot.

    Is it or isn't it? We know the Obama administration has been playing word games about the health care mandate right from the beginning, but now, the Romney campaign can't seem to make up its mind whether it's really a tax. And early this week, Romney advisor, Eric Fehrnstrom, said his boss had the same view as the White House, that it's a penalty, not a tax. But the candidate himself later walked that back, telling CBS News, quote, "The majority of the court said it's a tax and, therefore, it is a tax. They have spoken, there's no way around that," end quote.

    But has the opportunity to hang this vast middle class tax increase on President Obama been lost in the confusion? And does it reveal larger problems within the Romney campaign?

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

    Dan, how has the campaign dealt with this?

    DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Obviously, not well, David. You've just went through the sequence. The Supreme Court of the United States said it's a tax and they upheld the Obama health care law. The Obama White House says, it's not a tax, it's a penalty. Even though the law has been upheld, every major Republican says they have imposed a tax on the middle class, along comes the Romney campaign, oh, we agree, it's a penalty. Now, why are they saying this? They're saying this because Mitt Romney himself enacted the mandate in the Massachusetts health care law and they're afraid to have that called a tax. And that Massachusetts health care law is turning out to be the biggest gosh darn albatross is any presidential candidate has ever had to --


    ASMAN: Romney doesn't want to admit that.

    HENNINGER: I think he's got to admit that.


    HENNINGER: It's never too late.


    He has got it get that thing off his back and repudiate it.

    ASMAN: James, after spending so much time defending what he did in Massachusetts, how can he now come out and say that the mandate was a mistake with ObamaCare and a mistake in Massachusetts?

    JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: Yes, I think what he's got to understand is what the American people care more about than his consistency of health care policies over the years is their life and their money and their health. And this big government plan, which has now been affirmed, is going to take their money and guide their health care decisions. So, I think -- you know, it's not too late for Mr. Romney to say it's now clear how big of a disaster it this was and Mr. Obama's lawyer convinced the Supreme Court it was a tax and he also increased the authority for lots of other taxes.

    ASMAN: Well, the Wall Street Journal editorial page became news itself became news this week with an editorial you guys ran on Thursday entitled, "Romney's Tax Confusion." You talked about the confusion whether it's a penalty or a tax. and you mentioned one person in particular, Eric Fehrnstrom, who works for the Romney campaign and the guy who first agreed with President Obama and forced Romney to walk back and say, no, President Obama is wrong, it is a tax. The suggestion is a shake-up is needed within the Romney administration. Is that true?

    MARY ANASTASIA O'GRADY, COLUMNIST: I would say it's such a huge missed opportunity. You wonder who is behind this. How could see that ball coming over the plate and not hit it? This is a huge tax increase. President Obama is positioning the health care reform as something that is soft and cuddly and will make you feel better and make everybody -- put everybody in a better position. And this shows very clearly that it's going to be expensive and he could have built on that with the fact that it's 2,700 pages. No one knows how it's going to affect doctors. The costs of it are very high. And this was a great opportunity that I think they just completely missed.

    ASMAN: But, Dan, there was a big shake-up famously in the Reagan campaign back in 1980, sort of at this point is their campaign. Is a shake-up in the Romney campaign needed to straighten out the course?

    HENNINGER: David, look, we're not inside the campaigns. We don't know who is saying what. But I have another example that I think is almost as bad as the mandate tax issue. That is the 4th of July Jet Ski photograph.


    Seriously. This is like John Kerry water skiing.

    ASMAN: With Governor Romney and his wife.

    HENNINGER: Yes, on a Jet Ski, which sort of supports of the Obama idea this is a rich guy who has expensive toys.

    Now, I think any campaign manager worth his salt would have said to the candidate, you cannot get in the water on the Jet Ski with the photographers over there. But if the candidate says, I'm entitled to relax and I can do what I want to do, then the problems are at the top with Mitt Romney's political instincts. And then we'll have a problem where, two months from now, you will have a Michael Dukakis photograph --


    -- And he'll blow his campaign out of the water.

    ASMAN: Well, is a change at the top necessary? You mentioned in the editorial, you mentioned Eric Fehrnstrom --


    FREEMAN: -- the changes at the top.



    ASMAN: The top of the T. Obviously, Romney is the head of the campaign, but his campaign manager.

    FREEMAN: Mr. Fehrnstrom -- I supposed you worry about someone if you read the "Boston Globe" every day long enough, eventually, they might start to believe it. I think, really, the problem here is probably with Mr. Romney, that he needs to set a message, endorse a message and be willing to communicate it and deliver it with enthusiasm. And to this points, he's basically been saying, Obama is doing a terrible job, look at my resume. You need something more.

    ASMAN: Let's bring it back to the beginning. Finally, Governor Christie, of New Jersey, says, it doesn't matter what name you use to call ObamaCare mandate, whether it's a tax or a penalty, it still boils down to the same thing, big government telling you how to spend your money for something very personal in your life. That's what you should focus on, rather than words. Was he right?

    O'GRADY: Yes, I find that one of the problems with the Romney camp, it's not just this particular issue, but the fact that he's continually letting President Obama put him on the defensive. He has to choose a message, and the message should be, basically, that Obama is offering you a big entitlement state. Do you want to sign up for that? Give evidence of what life under the big entitlement state is like. And explain, I have a different path and explain what that is. And instead, He's constantly sucked into these debates about, you know, words or, whether he's rich or, you know, whether he should be allowed to be a rich president. I mean, he's defending himself. He should be on the offensive.