• With: Jason Riley, James Freeman, Kim Strassel, Dorothy Rabinowitz

    This is a rush transcript from "Journal Editorial Report," July 21, 2012. This copy may not be in its final form and may be updated.

    PAUL GIGOT, HOST: This week on the "Journal Editorial Report," the big theme of the presidential campaign takes shape, and it's a fight over whether government or private enterprise is the best path to job creation. So who is winning that argument so far?

    Plus, anticipation grows as Romney nears a VP pick. Is an early announcement smart? And who is most likely on the short list?

    And is the federal government targeting Mitt Romney donors? Our own Kim Strassel reports on what's happened to one donor singled out by the president's reelection campaign.

    (BEGIN VIDEO CLIP)

    PRESIDENT BARACK OBAMA: Governor Romney his -- his main claim to fame, the reason he says he can fix the economy is because of his business record.

    (SHOUTING)

    OBAMA: It turns out that his business record was starting a company that has been investing in what were called pioneers of outsourcing.

    (END VIDEO CLIP)

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

    That was President Obama on the same day of his now-famous "you didn't build that" comment going after Republican rival, Mitt Romney, for his time in private business and repeating the claim that Bain Capitol sent jobs overseas. The president's line of attack fits into what is fast becoming the central fight of the presidential campaign, whether government or private industry is best suited to create jobs. So who is winning that argument so far?

    We'll ask Wall Street Journal Political Diary editor, Jason Riley; assistant editorial page editor, James Freeman; and Washington columnist, Kim Strassel.

    So, Jason, candidates don't typically keep repeating an argument or hitting a theme unless it's working. Is this one working for Barack Obama?

    JASON RILEY, POLITICAL DIARY EDITOR: The closeness of the race nationally might suggest it's not working. But this race is going to be fought, for one, in a handful of swing states, Paul. What the White House believes, in some of those states, particularly the Rust Belt, Ohio, Pennsylvania, among working-class voters, among people without a college degree, plant, factory workers, that those tacks can be effective, and that is why they're doubling down on them. Even though some Democratic believe, like Newark Mayor Cory Booker and Steve Ratner, don't like them. It's working with some Obama voters or voters Obama is trying to reach.

    GIGOT: James, still even in polls. In fact, what is striking is that while Mitt Romney suffered, his negatives have gone up with these attacks, but it hasn't helped President Obama.

    JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: No. It's a big drag for the president, the fact the economy stinks.

    (LAUGHTER)

    It's a problem for an incumbent president a few months out from an election. For Romney supporters, the concern is that, boy, the economy is so bad. The stimulus didn't work. The health care plan is unpopular. Why doesn't Romney have a big lead? That coupled with the fact the Obama campaign is spending money on these ads suggests to people maybe the Bain tactics are working.

    GIGOT: Do you think it's working?

    FREEMAN: I think they were working. I think the "you didn't build that" issue of the past week has allowed Romney to go on the offensive a little more. And he can do better on Bain and I think he will.

    GIGOT: Kim, initially at least, the Romney campaign didn't want to engage on Bain because it wanted to focus on the economy and the failings there. Was that a mistake?

    KIM STRASSEL, WASHINGTON COLUMNIST: Absolutely. This week, they rolled out their seizing on executive contrasts, as you pointed to. Difference between Obama's centric view, government-centric view of the world and they're free market view of the world. They've done an effective job of tarring the president's view. And they seized on this week's "you didn't build it," helped them.

    What they haven't done is they have been more wary to make that contrast, to -- saying, yes, we believe in free markets, but won't embrace Bain or talk about off-shoring. And they won't because I think there is a belief, a fear that maybe the president's arguments about class warfare, the top 1 percent, Occupy Wall Street might resonate. They haven't gone out and done that. But they just keep getting hit on it. They're going to have to.

    GIGOT: What should they say? What more can they say?

    FREEMAN: You mean the Romney campaign?

    GIGOT: Yes.

    FREEMAN: You notice in that ad, the president said, I found the company where they did some outsourcing. Bain invested in more than 350 companies and 80 percent of them grew revenues. You look on the investment side, a Journal analysis earlier this year said that Romney was delivering investment gains of over 50 percent per year. This is one of the great performances in business history. Mr. Obama's friend, Warren Buffet, probably never had a run that good.

    (LAUGHTER)

    Granted he's been doing it for longer. But if they can't make this case, I -- I don't know what case --

    (CROSSTALK)

    GIGOT: Let's take a look at one of the ads Romney is running to fight back.

    (BEGIN VIDEO CLIP)

    ANNOUNCER: Where did the Obama stimulus money go? Friends, donors, campaign supporters, special interest groups. Where did the Obama stimulus money go? Solyndra. $500 million taxpayer dollars, bankrupt. So where did the Obama stimulus money go? Windmills from China, electric cars from Finland.

    SEN. CHUCK SCHUMER, D-N.Y.: 79 percent of the $2.1 billion in stimulus grants awarded through it went to overseas companies.

    MITT ROMNEY, R-FORMER MASSACHUSETTS GOVERNOR & PRESIDENTIAL CANDIDATE: I'm Mitt Romney, and I approve this message.

    (END VIDEO CLIP)

    GIGOT: Jason, this message basically says Obama is an outsourcer, too.

    (LAUGHTER)

    Is that an effective response?