• With: Mary Anastasia O'Grady, Dan Henninger, Jason Riley, Mary Kissel

    This is a rush transcript from "Journal Editorial Report," July 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," President Obama heads off the tax cliff. Will he take fellow Democrats and maybe some Republicans with him?

    Plus, Mitt Romney addresses the NAACP to cheers and jeers. Other Republican nominees have skipped it. So was it worth his time?

    And it is being hailed by some as the answer to the housing crisis, local government seizing underwater mortgages through eminent domain. But will that put a stop to foreclosures?

    (BEGIN VIDEO CLIP)

    PRESIDENT BARACK OBAMA: I'm not proposing anything radical here. I just believe that anybody making over $250,000 a year should go back to the income tax rates we were paying under Bill Clinton.

    (END VIDEO CLIP)

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

    That was President Obama on Monday invoking Bill Clinton in his call to raise taxes on Americans making more than $250,000 a year. He says his proposal isn't radical at all. So will congressional Democrats and maybe even some Republicans follow him off that tax cliff?

    Let's ask Wall Street Journal columnist and deputy editor, Dan Henninger; Political Diary editor, Jason Riley; and columnist, Mary Anastasia O'Grady.

    Mary, we have this huge tax cliff. Everybody agrees because of the expiring tax provisions, there would be a big potential hit in January on the economy. First of all, just substantively, is it already affecting economic growth?

    MARY ANASTASIA O'GRADY, COLUMNIST: Oh, sure it is. The big word out there is uncertainty. People feel uncertain. By the way, you said $250,000. That's for a couple. It is actually $200,000 for individuals. There are a number of Democrats who say that is way too low, if you are going to raise taxes on people, which this is basically a tax increase. But the other problem is that people look at the lack of a permanency. In other words, he says I am going to extend this for one year.

    GIGOT: Of course, those under $250,000 for one year.

    O'GRADY: Yes. Yes. And that leaves you wondering, how is he going to pay for this huge deficit? One year is not going to -- it is not over after a year. If he is re-elected, I am pretty sure my taxes are going up, the taxes on my small business are going up, the cost to pay for Obama-care will put a bigger burden on it. All of that is making investors hold back I think.

    GIGOT: This is the paradox, Dan. Why do this if you are the president if, as Mary suggest had -- and I agree with Mary, that it is already affecting the economy negatively -- why do this if it is going to hurt the economy between now and November?

    DAN HENNINGER, COLUMNIST, DEPUTY EDITOR: I don't think he cares.

    (LAUGHTER)

    Honestly. Honestly, Paul, I think it is purely a political ploy to re-elect him president. They have obviously got polls --

    (CROSSTALK)

    GIGOT: How can it help him if the economy continues is going down?

    (LAUGHTER)

    HENNINGER: You tell me.

    (LAUGHTER)

    What trumps that, in their minds, is the fact they have done polling that shows these attacks on the wealthy and the idea that his proposal to raise taxes on the wealthiest are polling well out in the country and in the swing states, end of story. As long as he can get it across the goal line, I don't think he cares how much economic wreckage --

    (CROSSTALK)

    GIGOT: Of course, if you ask people, the poll, raise taxes on the rich guy or me, which do you prefer? You always say the rich guy.

    (LAUGHTER)

    JASON RILEY, POLITICAL DIARY EDITOR: But Dan is right about the polls. There was an ABC News/Washington Post poll out recently that showed that on the issue of taxes, where Republicans usually out-perform Democrats, Romney and the president are performing evenly. Now if the president's internal polls are also showing that, perhaps that emboldened him to go forward with this tax plan. I think he thinks, "The American people trust me more on this issue. I can play this class warfare card and perhaps it will get me past November."

    GIGOT: Is that a failure though of Mitt Romney's ability to make the tax argument? Because Jason is right, historically Republicans have had a big tax advantage. Particularly when they say I will raise taxes on somebody.

    HENNINGER: I think in this point in time it is. Because I think, Paul, people out there -- with every passing week, more people start paying attention to a presidential election. It is July. I think people are getting nervous about the substance of what Obama has proposed. He gives the speech and he talks about millionaires ought to pay their fair share. Wait a minute, we are talking about people making $200,000 or $250,000. That is the upper middle class. Those are not wealthy people. I think this is beginning sinking in among the electorate that that proposal really touches the middle class. It is the level the middle class that people aspire getting into. You may be able to earn a million, but you can earn $250,000.

    GIGOT: He also says we are just going back to the Bill Clinton tax rates. That's not accurate because it ignores the fact that, under his health care bill, there will be a 3.8 percent surcharge, new, on investment income, in particular. So that means capital gains will go up 60 percent. The dividend rate could triple to 45 percent from 15 percent. That has to have an impact on stocks, for example.

    O'GRADY: This president is making a bet that his narrative about how the economy works, which is that rich people don't pay their fair share and they exploit the working class, he is betting the farm on that narrative.

    GIGOT: But economics is out here. He is basically saying that consumption, tax cuts to promote consumption, the middle class will spend their share of the taxes, OK. But tax rates on investment of savings don't matter.

    (CROSSTALK)

    GIGOT: But isn't all consumption a function ultimately of savings and investment?

    O'GRADY: Again, I think as you said to Dan, I think this is a failure of the Romney campaign. Without somebody counteracting the argument, I think it may be easy for the president, who is a much better political animal than Mitt Romney, to make the case that somehow you are not getting what you deserve because the rich are taking it.

    (CROSSTALK)

    RILEY: It is also a question of whether Republicans will stand their ground here. Two years ago, they did. And he was forced to extend the Bush tax cuts across the board. Will they do that again?

    (CROSSTALK)